Employees will not work more than five hours at a stretch, from April 1, Modi government will change working hours and retirement regulations

Harleen Kaur Grewal

New Delhi, February 7, 2021: From April 1, 2021, there may be significant changes made in gratuity, PF and working hours. Gratuity and provident fund (PF) items of employees will increase. At the same time, the money in hand (take home salary) will decrease. Even the balance sheets of companies will be affected. The reasons for this are the three Wages Code Bill (Code on Wages Bill) passed in Parliament last year. These Bills are likely to come into force from April 1, 2021.

Under the new definition of wage, allowances will be a maximum of 50% of the total salary. This means that the basic salary (basic salary and allowance in government jobs) should be 50 percent or more of the total salary from April. Significantly, for the first time in the country’s 73-year history, changes like these will be made in the labor law. The government claims that it will prove beneficial for both employers and workers.

Proposal to change 12 hours of work hours

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.

Hence salary will decrease and PF will increase

According to the new draft rule, the basic salary should be 50% or more of the total salary. This will change the pay structure of most employees, as the non-allowance portion of the salary is usually less than 50 percent of the total salary. At the same time, the share of allowances in the total salary hikes up. Increasing basic salary will also increase one’s PF. PF is based on basic salary. Increasing the basic pay will increase the PF, which means there will be a cut in take-home or on-hand pay.

Retirement amount will increase

Increase in contribution to gratuity and PF will 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-paid officers will undergo the biggest change and will be crucially affected.