It’s a mixed bag: More hours, better overtime rates; less take home but more when you retire: Nishant Mishra tries to explain the ‘new’ draft labour laws.
The Union Government has made some crucial changes in the to the rules of Labour laws and it seems to affect the hours one needs to work on a daily basis as well as the salary.
The changes are going to come in effect from October 1.
The government has said that the four new codes on industrial relations, wages, social security and occupational health safety (OSH), and working conditions will rationalise 44 central labour laws.
The existing provisions of the new rules will lead to an increase in working hours for employees from nine to 12 hours, while the in-hand salary will also see a change.
Under the new wage code, allowances have been capped at 50 per cent, which will lead to half of the monthly pay being calculated as basic wage. Provident fund (PF) contribution is calculated as a percentage of basic wage, which includes basic pay and dearness allowance.
Increase in basic pay will result in an increase in the PF contribution, which will reduce the take-home pay for workers. The PF liability for employers will also increase in many cases.
At the same time while as an effect to this the in-hand salary is going to decrease, but there will be significant increase in retirement benefits.
Resting Periods and Overtime
The new draft labour code has proposed that any work done between 15-30 minutes after the working hours should be counted as overtime for 30 minutes. Presently, 30 minutes duration of work outside working hours is not counted as overtime.
The draft also prohibits any employee to work continuously for more than 5 hours. It has included in its instructions a half-an-hour resting period after every five hour.
The draft also mentions that if a person works for 12 hours then he/she is required to work only for 4 days a week, which was 5 days as per the earlier labour laws.
Increase in working hours from 9hrs ( earlier ) to 12 hrs ( now )
Less in-hand salary
Increase in Retirement Benefits
Increase Employer’s cost