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7th Pay Commission: New Wage Code Bill or New Labor law?

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7th Pay Commission: New Wage Code Bill or New Labor law?
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From 1st of April, we may see the central government either implementing the New Wage Code Bill 2021 or new Labor Law. The changes may be regarding the official working hours, gratuity and PF. Along with it, the salary of the government employee may also rise.

There is a provision. This code says that the basic salary of the employees should be at 50% of one’s net monthly Cost to the Company.

Going by this provision, it would affect the basic pay structure of the employees and their PF, Travel allowances, House Rent Allowance, PF, Gratuity and Dearness Allowance as well.

However, the in-hand salary will reduce. Because if the salary is up to 50% then 24% of its share will go the PF account which simply means that PF will increase. The current percentage of PF deduction is 12%.

Earlier, employees had to work in a company for five years to be entitled to gratuity. But as per the new law, they will have the right over gratuity. Just after being employed in the company for one year. It may evoke a feeling of injustice in the existing employees.

There are no official announcements made about the implementation of this law from 1st April. But if there are, it will be the first time since independence that there will be changes made in the labour law.

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