Key changes in working hours, salary, PF, annual leave July 1?

Impact of new labour codes on employee's working hours, annual leave
The central government has worked on designing the four new labour codes. These significant changes will be effective changes to the employee’s salary, their PF contributions and work hours, etc.

The four labour codes on wages, social security, industrial relations and occupation safety, health, and working conditions are likely to be implemented from July 1, 2022.

The long-awaited introduction of four labour codes was originally scheduled to happen at the beginning of the current fiscal year. The new wage code will impact working hours, 4-day week salary restructuring and PF contribution, encashing of Earned Leaves after implementation.

The central government has worked on designing the four new labour codes. These significant changes will affect the employee’s salary, their PF contributions and work hours, etc.

This will encourage investment in the country. Also, the employment opportunities will increase. Till now, the states have prepared drafts for labour code rules including Uttarakhand, Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Odisha, Arunachal Pradesh, Haryana, Jharkhand, Punjab, Manipur, Bihar, Himachal Pradesh, and UT of Jammu and Kashmir.

These states have framed state labour codes and rules based on the new Code on Wages 2019, 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. 

Changes which may come into effect from July 1, 2022?

Working hours: Under the new labour laws, one major thing that is likely to be implemented is the change in workdays. With the Centre government’s new labour laws from July 1, the official working hours may increase to 12 hours with a 4-Day Week.

Presently, the working hours are based on the Factories Act, 1948 at the national level for workers in factories and other such workplaces. While it is governed by the Shops and Establishment Acts of each state for office workers and other employees.

The Centre is planning to implement the new rules as soon as possible. The companies may have to give employees work for four days instead of five, and there will be three weeks offs.

The workers from various companies across the UK have started a four days work week from June 6 as a pilot plan that will run for 6 months. It will work with the same pay while working for 4 days a week.

The programme is being organised by not-for-profit 4 Day Week Global, Autonomy and the 4 Day Week UK Campaign in partnership with researchers from the Cambridge University, the Oxford University and the Boston College.

The largest companies from across sectors – from financial services to hospitality – are participating in this four-day work week pilot plan. The United States, Canada, UK, Ireland, Australia, and New Zealand have implemented 4-days policies.

Take-Home Salary and PF contribution: As per the new labour laws, the basic salary will be 50% or more of the total salary.

The direct impact on the salary structure of most of the employees. The PF and gratuity money will be deducted more than before.

The increase in the PF contribution will directly affect the take-home salary as it will decrease but it will increase retirement contribution.

Annual Leaves: The central government under the new labour laws also wants to rationalise the leave an employee can avail of during his or her tenure at a company.  

On the other hand, the new labour codes have increased the eligibility requirement for leaves from 240 days of work to 180 days of work in one year.

This means that in order to be eligible for getting a leave, an employee has to work for 240 days after joining a new job.


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