Provident Fund Hike Soon: The central government is working towards finalising the new labour codes that are likely to be implemented anytime soon. Under this, the general work culture of India is going to go though a big change, according to people in the know. If the four labour codes come into effect, an important change would be how the salaries of the employees are currently calculated. While there will be an increase in the provident fund of the employees, their take home salaries will decrease accordingly. The central government is likely to implement the four new labour codes on wages, social security, industrial relations and occupation safety, health and working conditions, according to a report.
The implementation of the new labour codes will be done by the fiscal year beginning 2022, the report quoting a senior government official suggested. Under the new rules, employees across India are also likely to get three days’ leave each week and work for four days, among others. The Centre has already finalised the rules under these codes and now states are required to frame regulations on their part as labour is a concurrent subject, said the report.
As per a separate Hindustan Times report citing experts who are assessing the new labour codes, the take home salary of employees are also going to decrease. This is because these laws are going to change how the provident fund is calculated. This will reportedly prescribe that allowances cannot be more than 50 per cent of the total salary, meaning the basic pay has to be 50 per cent or more of total pay. Normally, employers keep the non-allowance part of the salary below 50 per cent, resulting in high in-hand pay for employees. However, once the changes are brought in, employers are required to increase the basic pay of employees. This will result in reduced take-home salaries because of rise in gratuity payments and employees’ contribution to the provident fund.
“The four labour codes are likely to be implemented in the next financial year of 2022-23 as a large number of states have finalised draft rules on these. The Centre has completed the process of finalising the draft rules on these codes in February 2021. But since labour is a concurrent subject, the Centre wants the states to implement these as well in one go,” said a senior government official, as per news agency PTI.
Union Labour Minister Bhupender Yadav in a reply to the Rajya Sabha last week had said that the Occupational Safety, Health and Working Conditions Code is the only code on which the least number of 13 states have pre-published the draft rules.
The report added that as many as 13 states have pre-published draft rules on The Occupational Safety, Health and Working Conditions Code. These are Uttarakhand, Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Odisha, Arunachal Pradesh, Haryana, Jharkhand, Punjab, Manipur, Bihar, Himachal Pradesh and UT of Jammu and Kashmir.
The central government has notified four labour codes, namely, the Code on Wages, 2019, on August 8, 2019, and the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020 on September 29, 2020. However, the Centre as well as states are required to notify rules under the four codes to enforce these laws in respective jurisdictions. Under the Codes, the power to make rules has been entrusted to the Central Government, State Government and appropriate Government and there is a requirement of publication of Rules in their official Gazette for a period of 30 or 45 days for public consultation.
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