Even 10 Mins Extra Work Means 30 Mins Of Overtime Pay For Govt, Private Employees! (Wage Code Bill)

Several changes under the gamut of the Wage Code Bill, related to the work timing, pay structure, take-home salary, provident fund and gratuity can be seen for the government employees.

The bill aka Code on Wages Bill 2019 was passed in Parliament in 2019. The government deferred the implementation of the rules in the new labor code, despite wanting to implement it from April 1, so that states get more time to prepare and companies get more time for changing their HR policy.

Maximum 12 Working Hours, Additional Work Counted As Overtime

According to the new draft, maximum working hours have been proposed to that to 12 hours. According to the rules, even if an employee works additionally for 15 to 30 minutes, it shall be counted as an overtime of 30 minutes for which the employees will be paid extra. This was different as earlier if an employee worked for less than 30 minutes, it was not considered as overtime.

Also, according to the Draft rules any employee who has worked for 5 hours straight, must be given a rest of half an hour and it is prohibited to work continuously for more than 5 hours.

Changes in Gratuity and Provident Fund (PF)

While there will be hike in PF and gratuity portions, the changes in pay structure will mean reduced pay as the take home salary decreases when the employees’ Gratuity and provident fund (PF) will increases.

Also, allowances will be a maximum of 50 percent of the total salary. There will be no effect on employees whose basic salary is already 50 per cent or more but those with there will be a change in the take-home salary of employees with basic salary less than 50 per cent.

And since the PF is calculated on the basis of basic salary, share towards the PF will also increase. The salary structure of high-paid employees with a high allowance component is most likely to be affected by these new rules. Also, the cost of companies could also increase due to increased PF and gratuity as companies contribute to these proportionately.

Also, the amount received after retirement will also increase by an increase in contribution to gratuity and PF, which in turn would make maximum retirement benefits easier.