Labor Codes: In-hands Salary of employees will decrease, PF will increase, know why this is going to happen

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Labor Codes: If you are doing a job, then some changes can be seen in the salary in your hands. The reason for this is that all four labor codes are likely to be implemented in the next few months. With the implementation of these four labor codes, the take-home salary will be reduced and the retirement amount will increase automatically. These labor codes were to be implemented earlier in April 2021. In which reduction in take-home salary and PF contribution would have increased. There is a possibility of increasing gratuity in this. Once the wage code is implemented, there will be major changes in the way employees calculate Basic Pay and Provident Fund.

What is new wage code?

After the implementation of the new Wage Code, employers will have to pay 50 percent of the CTC to the employee as a basic salary. This will increase the contribution of employees towards other components like PF and Gratuity. Bonus, pension, conveyance allowance, house rent allowance, housing benefit, overtime, etc. will be out when the new wage code is implemented. Companies will have to ensure that other than basic salary, some other components included in CTC should not exceed 50 percent and the other half should be basic salary.

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The Ministry of Labor also fixed the rules under four codes

The Ministry of Labor had also fixed the rules under four codes. But they could not be implemented. The reason for this was that they were not in a position to notify the rules under these codes. Under the Constitution of India, labor comes under the Concurrent List and hence these four codes have to notify the rules falling under them to make laws in their jurisdiction.

Many big states have not decided anything yet

According to media reports, many big states have not fixed the rules under the four codes. Some states are in the process of laying down rules to implement these laws. The central government cannot wait any longer for the states to decide the rules under these codes. Therefore, the central government is preparing to implement these codes within a few months. Because companies or establishments will have to give some time to adjust to the new law. According to the source, some states have already decided on the draft rules. These states are Uttar Pradesh, Bihar, Madhya Pradesh, Haryana, Odisha, Punjab, Gujarat, Karnataka, and Uttarakhand.


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