Provident Fund For 15 Lakh Employees Will Increase From January 1st: Find Out How?
Economics is a science of the allocation of resources. It helps us in understanding the way society decides to allocate its scarce resources for optimum use. This allocation of resources always involves tradeoffs. You have to give something away in return for something else.
The exact same scenario will be unfolding in India in its work culture. With the central government working towards finalizing the new labor codes, the general work culture of India is going to go through a big change.
Now, your social security will increase in exchange for less salary in hand
Once the four labor codes come into effect, the way salaries of the employees are currently calculated will be changed forever. While there will be an increase in the provident fund of the employees, their take-home salaries will decrease accordingly. According to sources, the new labor codes will be implemented by the fiscal year beginning 2022.
Along with the change in hand salaries, the number of workdays in India will also change. Under the new rules, employees across India are also likely to get three days’ leave each week and work for four days. The Centre has already finalized the rules under these codes and now states are required to frame regulations on their part as labor is a concurrent subject.
Once these new codes are enacted, allowances cannot be more than 50 percent of the total salary, meaning the basic pay has to be 50 percent or more of total pay. Normally, employers keep the non allowance part of the salary below 50 percent, resulting in high in-hand pay for employees. However, the codes are implemented employers are required to increase the basic pay of employees. This will result in reduced take-home salaries because of rising in gratuity payments and employees’ contribution to the provident fund.
States are already gearing up for implementation of these codes
Last week in Rajya Sabha, Union Labour Minister Bhupender Yadav had informed that the Occupational Safety, Health, and Working Conditions Code is the only code on which the least number of 13 states have pre-published the draft rules.
At present, as many as 13 states have pre-published draft rules on The Occupational Safety, Health, and Working Conditions Code. These are Uttarakhand, Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Odisha, Arunachal Pradesh, Haryana, Jharkhand, Punjab, Manipur, Bihar, Himachal Pradesh, and UT of Jammu and Kashmir.
The first of four labor codes, the Code on Wages, 2019, was notified on on August 8, 2019, and the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020, were notified on September 29, 2020.
It should be noted that, under the Codes, the power to make rules has been entrusted to the Central Government, State Government, and appropriate Government. There is also a requirement for publication of Rules in their official Gazette for a period of 30 or 45 days for public consultation