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New Salary Structure: Salary coming in the hands of employees will decrease, PF will increase, know why

New Salary Structure: The four labor codes are likely to be implemented in the next few months. This can reduce the take home salary


New Salary Structure: If you are doing a job, then some changes can be seen in the salary in your hands. The reason for this is that there is a possibility of implementation of all four labor codes in the next few months.

With the implementation of these four labor codes, the take home salary will be reduced, the retirement amount will increase automatically. These labor codes were earlier to be implemented in April 2021. In which reduction in take home salary and PF contribution would have increased. There is a possibility of increasing gratuity in this.

Once the wage code is implemented, there will be major changes in the way employees calculate Basic Pay and Provident Fund.


what is new wage code

The government has prepared 4 new wage codes by combining 29 labor laws. These include the Industrial Relations Code, Code on Occupational Safety, Health and Working Conditions Code (OSH) and Social Security Code on Wages. According to the Wage Code Act, 2019, now the basic salary of an employee in any company cannot be less than 50 percent of the cost of the company (CTC).

After the implementation of the new Wage Code, employers will have to pay 50 percent of the CTC to the employee as basic salary. This will increase the contribution of employees towards other components like provident fund and gratuity. Bonuses, pension, conveyance allowance, house rent allowance, housing benefits, overtime etc. will be out when the new wage code is implemented.

It will basically consist of three components including basic pay, DA (dearness allowance) retention payment. Companies will have to ensure that apart from basic salary, some other components included in CTC should not exceed 50 per cent and the other half should be basic salary.


States will also have to decide rules

The Labor Ministry had also fixed the rules under the four codes. But they could not be implemented. The reason for this was that they were not in a position to notify the rules under these codes. Under the Constitution of India, labor comes under the Concurrent List and hence these four codes have to notify the rules falling under them in order to make laws in their jurisdiction.

According to media reports, many big states have not fixed the rules under the four codes. Some states are in the process of laying down rules to enforce these laws. The central government cannot wait any longer for the states to decide the rules under these codes. Therefore, the central government is preparing to implement these codes within a few months. Because companies or establishments will have to give some time to adjust to the new law.


According to the source, some states have already decided the draft rules. These states are Uttar Pradesh, Bihar, Madhya Pradesh, Haryana, Odisha, Punjab, Gujarat, Karnataka and Uttarakhand.

Parvesh Maurya
Parvesh Maurya
Parvesh Maurya, has 5 years of experience in writing Finance Content, Entertainment news, Cricket and more. He has done BA in English. He loves to Play Sports and read books in free time. In case of any complain or feedback, please contact me @ informalnewz@gmail.com
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