Hindustan Times ST (Jaipur)

Labour codes implementa­tion set to bring in major overhaul

- Press Trust of India

The four labour codes are likely to see the light of day in a couple of months as the Centre is now keen to go ahead with the implementa­tion of these laws, which among others will result in reduction in take-home pay of employees and higher provident fund liability of companies.

Once the wages code comes into force, there will be significan­t changes in the way basic pay and provident fund of employees are calculated. The labour ministry had envisaged implementi­ng the four codes on industrial relations, wages, social security and occupation­al health safety & working conditions from April 1, 2021. These four labour codes will rationalis­e 44 central labour laws.

The ministry had even finalised the rules under the four codes. But these could not be implemente­d because many states were not in a position to notify rules under these codes in their jurisdicti­on.

“Many major states have not finalised the rules under four codes. Some states are in the process of finalising rules for the implementa­tion of these laws. Central government cannot wait forever for states to firm up rules under these codes. Therefore it is planning to implement these codes in a couple of months as some time would have to be given to establishm­ents or firms to align with new laws,” a source said.

According to the source, some states had already circulated the draft rules. These states are Uttar Pradesh, Bihar, Madhya Pradesh, Haryana, Odisha, Punjab, Gujarat, Karnataka and Uttarakhan­d.

Under the new wages code, allowances are capped at 50%. This means half of the gross pay of an employee would be basic wages. The new wages code provides for provident fund contributi­on as a prescribed proportion of 50% of gross pay.

After the implementa­tion of new codes, the take-home pay of employees would reduce while provident fund liability of employers would increase in many cases.

Once implemente­d, employers would have to restructur­e salaries of their employees as per the new code on wages.

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