4-day work week, pay change: India’s new labor codes likely for fiscal year 2022-23 | Latest India News

India is expected to implement four new labor codes on wages, social security, industrial relations and occupational safety by the next fiscal year starting in 2022, according to a senior government official quoted by the agency PTI press release. Under these new codes, a number of aspects related to employment and the work culture in general could change, including the take-home pay of employees, the hours of work and the number of days of the week.

If the new labor codes are implemented, it is likely that Indian employees will be able to enjoy a four-day work week from next year, as opposed to the current five-day work week. In this case, however, employees will be required to work 12 hours out of those four days, as the Labor Department has made it clear that even if the proposal is passed, the 48-hour weekly work requirement must be met.

Labor codes also take on increased importance in light of the fact that once they are implemented there will be a reduction in the take-home pay of employees and companies will have to bear a higher contingency fund commitment.

Less net salary, more FP

According to experts who assess the draft labor codes, the new laws will bring about a major change in the way employees calculate their base salary and the provident fund (PF). Under these new codes, employees’ contribution to their PF account will increase each month but the monthly salary in hand would in turn be reduced.

The regulations limit the allowances to 50 percent, which implies that half of the salary would be the base salary and the contribution to the provident fund is calculated as a percentage of the base salary which includes the base salary and the cost allowance (DA).

Under the current labor regulations, the employer’s percentage contribution to the PF balance depends on the employee’s basic salary and cost allowance. Say if an employee’s salary is ??50,000 per month, their base salary could be ??25,000 and the rest ??25,000 could go into allowances. However, if this base salary is increased, more PF will be deducted, thus decreasing the salary on hand and increasing the employer / company contribution.

Labor codes finalized, likely to be implemented in the next fiscal year

The central government has already finalized the rules of the four labor codes and states are now required to develop regulations on their part, as labor is a competing subject.

“The four labor codes should be implemented during the next fiscal year 2022-2023, because a large number of states have finalized draft rules on this subject,” said the senior government official quoted by PTI. “The Center completed the process of finalizing the draft rules on these codes in February 2021. But since the work is a competing subject, the Center wants states to implement them all at once as well.”

At least 13 states have pre-published draft rules

At least 13 states have pre-published draft rules on these laws, the official said.

Union Labor Minister Bhupender Yadav also said in a response to Rajya Sabha earlier this week that the Occupational Safety, Health and Working Conditions Code is the only code on which the under 13 States have pre-published the draft rules.

The largest number of draft notifications are prepublished on the Wages Code by 24 states / UTs, followed by the Industrial Relations Code (by 20 states) and the Social Security Code (18) states.

Maria D. Ervin