New Wage Code – Center aims nationwide rollout, 50% salary cap

Recently, the Union Labour Ministry held a crucial meeting with industry stakeholders to debate allowance and wage structure under the New Wage Code.

According to reports, the restriction that allowances cannot exceed 50% of income allegedly sparked heated debate during the meeting. The business community has also requested clarification on wage structure before adopting the new Wage Code law.

A lower take-home pay and a larger contribution to the Provident Fund are the likely outcomes of an agreement capping allowances at 50% of income.

The business community anticipates that the new pay legislation will increase their workload immediately. This means the sector should have two to three months to adjust to the new regulations.

The Central Government aims to roll out the New Wage Code nationwide at the same time, as was agreed at a recent meeting between the Union Labour Ministry and state governments.

No changes were made on July 1 to the four labour laws that were expected to govern pay, social security, industrial relations, and occupational safety, health, and working conditions.

Among the most noticeable changes brought about by the new pay law are those to working hours, salary restructures, and PF contribution once it is implemented. Since these are early assumptions at best, employees will have to wait until the government provides official notification of the guidelines.

Following the implementation of the new law, the following five requirements will be in effect:

No worker will ever be expected to work more than 48 hours weekly. The employee will have the option of working either four days per week (12 hours per day) or six days per week (24 hours per day) (8 hours a day).

A higher gratuity is a direct result of the mandated rise in the minimum wage to 50% of the gross compensation. Increasing PF contributions from both the company and the employee will reduce take-home pay.

If an employee has worked 180 days instead of 240, he will receive one extra day of vacation for every 20 days worked.

Women’s standard 12 weeks of maternity leave will be raised to 26. Maternity leave was extended from three to six months in 2017, thanks to a change made to the Maternity Benefit Act 1961.

We shall establish a minimum wage that will be paid to workers in both organised and unorganised economies. Additionally, in the event of an employee’s departure, the employer is responsible for making a final payment in full no later than the second business day following the employee’s last day.

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