From April 1, 2021, there may be a big change in your gratuity, PF and working hours. Employees will get an increase in the Gratuity and Provident Fund (PF) item. At the same time, the money in hand (take home salary) will decrease but the money received on retirement can increase. Even the balance sheet of the companies will be affected by this. The reason for this is the three Wages Code Bill (Code on Wages Bill) passed in Parliament last year. These Bills are likely to come into force from April 1 this year.
Under the new definition of wage, the allowances will be a maximum of 50 per cent of the total salary. This means that the basic salary (basic salary and dearness allowance in government jobs) should be 50 per cent or more of the total salary from April. Significantly, for the first time in the country’s 73-year history, changes are being made in the labor law in this way. The government claims that it will prove beneficial for both employers and workers.
Therefore salary will decrease and PF will increase
According to the new draft rule, the basic salary should be 50% or more of the total salary. This would change the pay structure of most employees, as the non-allowance portion of the salary is usually less than 50 per cent of the total salary. At the same time, the share of allowances in the total salary becomes even more. Increasing the basic salary will also increase your PF. PF is based on basic salary. Increasing the basic salary will increase the PF, which means there will be a cut in take-home or on-hand pay.
Retirement amount will increase
Increase in contribution to gratuity and PF will increase the amount received after retirement. This will make it easier for people to live a pleasant life after retirement. The salary structure of high-paid officers will undergo the biggest change and they will be the most affected due to this. Increasing PF and gratuity will also increase the cost of companies. Because they too have to contribute more to the PF for the employees. The balance sheet of companies will also be affected by these things.
Working hours proposed to break 12 hours and half hours
The new draft law proposes to increase the maximum working hours to 12. The draft rules of the OSCH code also provide for the addition of between 15 and 30 minutes of overtime by counting 30 minutes of overtime. Less than 30 minutes are not considered overtime eligible in the current rule. Draft rules prohibit any employee from working continuously for more than 5 hours. Instructions to give employees half-an-hour rest after every five hours are also included in the draft rules.
INREASING PF CONTRIBUTION IS FINE. BUT OVERALL THE INTEREST RATES ARE COMING DOWN ON PF CONTRIBUTIONS. IF THE RATES ARE REDUCED YEAR ON YEAR BASIS, THE EMPLOYEE WILL GET LESS RETURN ONLY AT THE TTIME OF RETIREMENT COMPARED WHAT HE USED TO GET 10 YEARS BEFORE AS INTEREST??