In-Hand Salary Of Indian Employees Will Change From Oct 1: New Overtime, Basic Pay & More

The existing Labour law code, documented under the Code of Wages, 2019 will inculcate a list of changes/modifications, starting October 1.

Right from increasing the basic pay salaries to increasing the duration of working hours, starting next month will in some ways, change the way an employee works and what he/she takes away, compensation-wise.

The new draft law also proposes some changes in the existing interpretation of ‘eligible overtime’. 

Get to know all the changes in the labour code, starting next month.

Changes in the Labour Code

The new draft rule will introduce a list of changes in the existing Labour Code, 2019. 

Increase in Basic Pay

The basic pay is ‘according to the draft rule’ going to increase by at least 50% of the total salary. Consequently, the salary structure will change too, as the non-perks part of the salary will fall below 50% of the total salary.

Along with the increase in basic pay, other benefit allowances (in the total salary) will increase too.

Increase in PF

As the basic pay will be revised and increase from October 1, the provident fund amount will increase too. This means the amount that an employee will receive as pension after retirement, will see an increase too.

This also means that the monthly in-hand salary will see a reduction but it could cancel out as the basic pay will increase too.

Besides, as the PF will increase, the cost of companies to bear the risen PF and gratuity will increase too.

It is stated that the employees paid highest in the office hierarchy are bound to see the most effects of this change.

Working Hours Proposed to Increase

In the new draft code, there has been a proposal to increase working hours from 9 to 12 hours. 

Additionally, it also includes the contours of defining eligible overtime. Currently, if an employee works extra for 15 to 30 minutes past his/her scheduled billable hours, it is not counted under ‘eligible overtime’.

This means, to be considered under the scale, an employee has to work extra for at least 30 minutes.

Under the new draft code, the measure to include working from 15 to 30 minutes as eligible overtime has been proposed.

The new rules have also made it compulsory for employees to take a break/rest for half-an-hour, after working for 5 hours. This means employers cannot let their employees work for more than 5 hours in a row without a break.