New policy & Law in India in April: Five changes on working hours and salary
New policy & Law in India in April. Photo: Myadvo

The new financial year is going to start from April 1 and with the start of the new fiscal, several changes will also take place. This comes as the government had in 2020 passed three wage code bills in Parliament. These three laws can now be implemented from April 1, 2021. If this happens, the take-home salary of the employees will be reduced. Also, its effect will be on all the employees and theơ employer. The balance sheet of private companies will also be affected by this new rule, English Jagran noted.

1. Salaries will be reduced but PF will increase

New policy & Law in India in April: Five changes on working hours and salary
Photo: Inc

The cost-to-company (CTC) of an employee typically comprises three-to-four components. The basic wage, house rent allowance (HRA), retirement benefits (provident fund, or PF, gratuity accruals, National Pension System), and flexible tax-friendly allowances such as leave travel allowance and entertainment allowance.

The wage code has defined inclusions and exclusions to be considered while calculating wages. “All existing elements that constitute the wage need to be looked at as per the inclusions and exclusions, which means that companies would need to make sure that the exclusions as defined in the new wage code do not exceed 50% of the total remuneration," said Preeti Chandrashekhar, India business leader, health and wealth, Mercer. So, if a person’s salary per month is ₹1 lakh, the exclusions mentioned can’t be more than 50% of the salary; therefore, the basic wage will have to be ₹50,000. Companies may have to cut down certain allowances to meet the 50% limit for basic wage. “Allowances will be come down for most employees as the basic salary may go up from an average 30% as per our experience to 50% as per law," said Sudhir Kaushik, chief executive, Taxspanner.com.

2. The amount at retirement will increase

New policy & Law in India in April: Five changes on working hours and salary
Photo: International-adviser

The increase in gratuity and PF contribution will eventually increase the amount received after retirement. This will make it easier for people to live a pleasant life after retirement. The salary structure of high-paying officers will change the most and will be the worst affected. The increase in PF and gratuity will also increase the cost of companies. Because they also have to contribute more to the PF for the employees. These things will also affect the balance sheets of the companies, according to Dnaindia.

READ MORE: Take home Salary Reduce in India - New Policy & Law Since April

3. New rules to be proposed for 12 hours of work, overtime

New policy & Law in India in April: Five changes on working hours and salary
Photo: Kcrecruitment

The new draft law proposes to increase the maximum working hours to 12. The draft rules of the OSCH Code also provide for the addition of between 15 to 30 minutes of overtime by counting 30 minutes. Under the current rule, less than 30 minutes is not considered overtime-eligible. Draft rules prohibit any employee from working continuously for more than 5 hours. Instructions to give employees a rest of half an hour after every five hours are also included in the draft rules, Punekarnews cited.

READ MORE: New Policy & Law in India in April: Five Changes in Income Tax Rules To Know

4. Employees won't work for more than five hours

New policy & Law in India in April: Five changes on working hours and salary
Photo: Elearning Ibi
The periods of work must be fixed in such a way that no period should exceed five hours (exemption can be granted to extend this period to 6 hours). The draft rules prohibit more than 5 hours of continuous work from any employee. Instructions to give half an hour rest to the employees every five hours are also included in the draft rules.

5. A break of 30 minutes would be mandatory after every five hours of work.

New policy & Law in India in April: Five changes on working hours and salary
Photo: Realbusiness

A worker must get a rest interval of at least half an hour (30 minutes) after at most five hours of work. The total spread over (of working hours) inclusive of rest breaks and overtime cannot exceed ten and a half hours in any day. This means that an overtime of 2 hours is allowed per day, according to Paycheck.

Other changes

NIGHT WORK COMPENSATION

In accordance with the Factories Act, the night shift is a shift that extends beyond midnight. There is no special pay premium for employees working overnight. The Code on Wages Bill, 2019 was passed by the Lok Sabha on July 30, 2019, and Rajya Sabha on 02 August 2019.

COMPENSATORY HOLIDAYS / REST DAYS

In extraordinary circumstances, workers may perform work on weekly rest days and public holidays. If workers lost their weekly rest days due to the exemption granted to an establishment under section 52 of the Factories Act, these workers must be provided with compensatory rest days within the following 2 months.

There is no provision for a compensatory holiday for workers working on a public holiday. The Code on Wages Bill, 2019 was passed by the Lok Sabha on July 30, 2019, and Rajya Sabha on 02 August 2019.

WEEKEND / PUBLIC HOLIDAY WORK COMPENSATION

Workers may be required to work on weekly rest days and public holidays. There is no Central level legislation in this respect. Different State level Acts (National and Festival Holiday Acts) provide that in such circumstances when workers have to work on official holidays, they are entitled to receive wages at a premium rate of 200% of the normal hourly wage rate. Workers working on weekly rest days are entitled to premium pay at the rate of 200% of the normal wage rate. A worker may be provided twice the wages for working on a public holiday or may be provided with a substitute holiday with pay. A worker who is required to work on a rest day must be paid wages at the overtime rates (twice the rate of wages).

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