The Union ministry of labour and employment is soon set to implement four labour codes to amalgamate 29 central laws related to labour laws. From working hours to salary received by an employee in-hand, the new labour codes will make the employment scenario in India go through a paradigm shift to adapt to the modern day requirements. The government, through this amended labour law, has aimed to ensure the employees’ welfare and their social security. Once implemented, the new labour codes are expected to revamp the rules dictating the age old relationship between employees and their employers.
Here are 5 Key Things You Need to Know About the New Labour Codes
Why Have the Labour Codes Been Introduced?
The labour codes have been introduced by the government to modernise employment regulations. “The purpose of introduction of the aforementioned labour laws were to simplify and modernise labour regulations. While the Parliament passed the Code on Wages in August 2019, the other three labour legislations, namely, the Industrial Relations Code, 2020; the Occupational Safety, Health and Working Conditions Code, 2020; and the Code on Social Security, 2020 were passed by the Parliament in September 2020,” said Srinivas BR, Partner at DSK Legal.
What do the Labour Codes Promise to do?
Under the new labour codes, employees will have the right to get minimum wages and their social security coverage will also be expanded. The new codes will benefit both the organised and the unorganised sectors.
“The Code universalizes right to minimum and timely payments of wages, expands Social Security coverage, while empowering and protecting women, as well as easing the lives of Inter-State migrant workers. These changes shall increase employment and output from workers, not only this, these changes are in form of preventive measures being taken before hand for limited disputes in the following fields as aforementioned,” said Anushkaa Arora, Principal and Founder at ABA Law Office.
“These Labour Reforms are aimed at enhancing Ease of Doing Business in the country. Employment creation and output of workers will also get enhanced. The benefits of these four Labour Codes will be available to workers of both organised and unorganised sector,” added Aditya Chopra, Managing Partner at Victoriam Legalis – Advocates & Solicitors.
Changes in PF Contributions and Salary
“Under the new Wage Code the employees’ take-home salary will change significantly. As with the basic salary being at least 50 per cent of the gross monthly salary, the PF to the fund will rise and will prove beneficial at the time of retirement of workers,” said Arora.
As per Sameer Jain, Managing Partner at PSL Advocates and Solicitors, “The basic salary has been set at 50 per cent of the CTC, previously 35-40 per cent, which will increase the PF contribution set at 12 per cent for employer and employee thereby reducing the take home salary of the employee.”
Changes in Working Hours and Four-Day Work Week
Under the new labour laws, one major thing that is likely to be implemented is the change in workdays. Once the new rule comes into effect, companies will be able to make employees work for four days instead of five, and there will be three week offs. “Regular work hours can become 12 hours in a day from 9 hours at present. If a company decides to opt for this, the working days would have to be capped at 4 days a week with 3 mandatory offs. In all, the week’s total working hours will remain unchanged at 48 hours,” said Chopra.
When will the Labour Laws be Implemented
While several media reports say that these changes will be implemented on July 1, many others argue that they will come into effect by the third quarter of this financial year. ” As per the media reports, it is speculated that the Labour Codes will come into effect by in the third quarter of this financial year. However, there has been no official communication from the Government in this regard,” said Srinivas BR.
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