Taking a big step towards labor reforms in the country, the Central Government has notified all the rules of the new Labor Code. After the implementation of these new rules, many important changes related to working culture, salary structure, PF and gratuity will be seen. The special thing is that now 48 hour work week has been formally recognized.
48 hour work week approved
Under the new labor code, the weekly working time for employees has been fixed at 48 hours. This means that companies will be able to prepare schedules according to a maximum of 6 days of work in which the limit of daily working hours will be implemented as per the prescribed rules. The government believes that this change will help in improving the productivity of workers and work life balance.
Big change in salary structure
Under the new rules, important changes have also been made regarding the structure of total CTC and basic salary. Now in many cases the basic salary will be a major part of the total salary which may lead to increase in PF and other social security contributions. This may also have a direct impact on the in-hand salary of the employees as the contribution towards PF and gratuity is likely to increase.
New structure regarding PF and social security
In the new Labor Code, emphasis has been laid on strengthening the Provident Fund. Contribution to PF will increase due to higher basic salary, which will enable employees to get better retirement benefits in the long run. Along with this, social security schemes have also been made more comprehensive so that unorganized and gig workers can also get security coverage.
Changes in gratuity rules also
Under the new rules, the eligibility and calculation system of gratuity has been changed. Now, in some cases, the way has been cleared to get the benefits of gratuity even in a short time, which can provide relief to the employees changing jobs.
Reforms in employment and retrenchment rules
In the new Labor Code, an attempt has been made to make the hiring and layoff rules simple and transparent. The compliance process for companies has been simplified while emphasis has also been placed on protecting the rights of employees.
Industry reaction
Industry experts believe that these reforms will make India’s labor market more modern and investment friendly. However, some employee organizations have also expressed concern about the change in salary structure.