New Labor Code: Due to the increase in wages in the new labor code, the employee and employer will have to contribute more to the Provident Fund. This will also affect the amount of gratuity. The take home salary of the employees will be reduced.
New Delhi. The Modi government at the Center is preparing for changes in the new labor code. As soon as this is implemented, the share of allowance in the wages will be reduced. Under this, the wage limit for the first year allowance will be 75-80 percent, which can be reduced to 50 percent in three years.
In the proposed new labor code, a limit of 300 personnel has been fixed for layoffs or closure of business. After the opposition of the Labor Union, the idea of making it 100 is going on. Under the Industrial Relations Code, government approval will be required for companies with up to 100 employees to lay off employees or close business.
These allowances will be included
The industry has opposed the 50 per cent cap for allowances. He argues that this will increase the cost of employees. Wages in the new labor code will include salary and allowances. This will also include Basic Pay, Dearness Allowances (DA) and Retaining Allowances. House Rent Allowance (HRA) and Overtime Allowance will not be included.
If allowances are not included then…
In the new labor code, it has been said that if 50 percent of the allowance not included in the wages or more than the prescribed limit, the additional amount will be considered as remuneration. Under this clause, he will be included in the wedges. In such a situation, due to increase in wages, the applicant and the employer will have to contribute more to the provident fund. This will also affect the amount of gratuity. Its biggest impact will be on the take home salary of the employee, which will decrease. However, the total contribution to saving for retirement will increase.
Companies claim … unnecessary pressure will increase
The proposed new labor code has increased the concerns of companies. He says that the economy is recovering from the pandemic. Business activities are improving. In such a situation, the change in the new code will increase unnecessary pressure on them. The Labor Code on Wages was passed by Parliament in 2019. The Industrial Relations Code was approved in September last year.
