The Centre is looking to implement a series of labour reforms from July 1. The new rules, if implemented, will bring sweeping and drastic changes to all industries and sectors in India. Most importantly, under the new regulations the working hours of employees, employee provident fund contributions from the employee and salary structures will see massive changes.
While reports indicate that the government is looking to implement these rules as soon as possible, no official notification has been issued yet. The reforms tackle areas like wages, social security (pension, gratuity), labour welfare, health, safety and working conditions (including that of women), where regulation in India had stagnated in the face of accelerated global corporate progress.
So far 23 states have framed state labour codes and rules based on the new Code on Wages, 2019, and the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020, all of which have been passed by the Parliament.
Working Hours
One of the most talked-about changes that the new rules would bring is working hours for employees. Currently, working hours are governed by the Factories Act, 1948 at the national level for workers in factories and other such workplaces, and by the Shops and Establishment Acts of each state for office workers and other employees. Under the new rules, daily and weekly working hours have been capped at 12 hours and 48 hours. This will allow companies to bring in 4-day workweeks, while overtime has been increased from 50 hours to 125 hours in a quarter across industries.
Salary Structure
Under the new codes, the basic salary of an employee will have to be at least 50 percent of the gross salary of an employee. As a result, employees will be making larger contributions to their EPF accounts and gratuity deductions will also increase which will decrease take-home salaries of most employees. However, the benefits they will receive after retirement will increase.
Leaves
The government has also rationalised leave schemes under the new labour codes. While the quantum of leaves in a year remains the same, employees will now earn a leave for every 20 days of work instead of 45. New employees will also be eligible to earn leaves after 180 days of employment instead of 240 days of work.
(Edited by : Sudarsanan Mani)
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