Once the new Wage Code Bill (Code on Wages Bill 2019) is implemented , employees could see reforms in multiple aspects of their work conditions and salary aspects.
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Bill Implementation Delayed
The bill was passed in the parliament in 2019 and was expected to go into effect from this April.
But it had to be deferred since states did not have adequate time to accommodate the changes.
Companies als had short notice to make adjustments to their HR policies.
As the pay structure changes, workers could take home reduced pay but may receive hikes in gratuity and PF.
New Wage Definition
The new bill has redefined wages which will now be considered to be a maximum of 50% of total salary.
Those whose basic salary is below the 50% mark will see an increase in PF contribution since its calculation is dependent on the amount of basic salary.Â
Impact on PF & Gratuity
It must also be noted that this increased PF and gratuity contribution will lead to an increase in the amount a worker receives upon retirement.
Thus another benefit of the new code is its contribution towards maximum retirement benefits.
Salary structures of those employees are more likely to be affected who are paid higher and thereby have a higher allowance component.
This also means higher costs to the employers who will have to contribute more in proportion to increasing PF and gratuity.
Maximum Working Hours & Overtime
The bill seeks to cap maximum working hours at 12. It also proposes that work performed for additional 15-20 minutes should be considered ‘overtime’.
The current rule states that if one has worked for less than 15 minutes over and above their total shift hours, it cannot be ruled as overtime.
The law also forbids an employee from working at a stretch for 5 hours without a break.
If they have worked for 5 hours continuously they have to mandatorily take a rest break for 30 minutes.
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