7th Pay Commission: Centre is planning to implement New Wage Code Bill 2021 from April 1. An announcement in this regard was made by Finance Minister during Budget 2021.
Amid the wait for the announcement of increase in DA (Dearness Allowance), the PM Narendra Modi-led government can implement the new labor law from April 1. If this happens, employees will have a mixed experience because the new law will give you some advantages and some disadvantages. As per reports, your contribution to the Provident Fund will increase but the in-hand salary will come down.
The New Wage Code Bill has been passed by Parliament. Now preparations are being made to implement it. There will be a big change in your salary when the new labor law comes into force. The figures for PF, Gratuity, Dearness Allowance, Travel Allowance and House Rent Allowance will all be changed.
As everyone is waiting for the announcement of an increase in Dearness Allowance (DA) if this law comes into effect employees will have a mixed experience as there will be both advantages and disadvantages. According to reports, contribution to provident fund is expected to rise while in-hand salary is said to come down.
Also, the new wage code proposed by the government has the provision to have the basic salary of the employees at 50 per cent of one’s net monthly Cost to Company (CTC) and hence the changes would affect the basic pay structure of an employee as the figures for PF, Gratuity, Dearness Allowance, Travel Allowance and House Rent Allowance will change.
In-hand salary to come down: After the law will come into force it is said that the take-home salary of an employee may decrease as if the basic salary is up to 50 percent then 24 (12+12) percent of its share will be transferred to the employee’s PF account. This also means that the PF contribution will increase. Currently, most of the companies deduct 12 percent of PF from the CTC of the employees.
Change in gratuity rules: According to the new law, employees will be entitled to gratuity even if they have been employed for just one year. However, currently, employees are getting gratuity after five years of continuous work in the same company. If the new wage code gets implemented, then it will be for the first time after independence that any changes have been made in the labour laws. However, no official announcement has been made yet if the wage code will be implemented from April 1, 2021, or not.
Basic salary will increase: According to the new rules, the share of basic salary in your CTC should be 50 percent or more. If the basic salary is less than 50 percent in your salary details, then it is going to change soon. Your CTC may also increase along with your basic salary when the new rules are implemented.
