Things to know about New Wage Code | Fusion - WeRIndia

Things to know about New Wage Code

Things to know about New Wage Code

The Indian government approved a new wage code. While this code was supposed to be implemented from April 1 this year, it was put on hold as several states did not send draft rules to the Centre. The new Wage Code will come into force from October as per sources.

The new code will affect employees’ lives majorly as the government brought in many changes under this bill.

Here are some important points about the New Wage Code:

  • The new wage code will change the salary structure of employees. Normally employers split wages/salaries into various allowances to reduce provident fund (PF) and income tax burden. But, as per the New Wage Code, the wage of an employee shall have to comprise at least 50% of the total salary that the employee is getting. That means, allowances are capped at 20%. Hence, employers have to restructure the salaries of their employees. The take-home salary will be reduced as per this bill, while other components like PF, gratuity will be increased.
  • The new Wage Code suggests increasing the working hours of employees from 9 hours to 12 hours. Hence, a 48-hour work rule will come into force. As per this rule, if anyone works 8 hours a day, the individual will have to work 6 days a week and get a day off. On the other hand, if employees work on 12 hours shift, they will get a three-day off/leave.
  • All types of workers will get minimum wages or salaries. Besides, employees of both organised and unorganised sectors will be covered under the Employees’ State Insurance (ESI). New schemes are designed for migrant labours.
  • The earned leaves of employees could increase from 240 to 300 as per the discussions of the Labour Ministry with labour unions.

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