Changes In Working Hours, Provident Fund And Gratuity From April With New Wage Code Bills Coming Into Effect

Substantial changes are expected in official working hours, provident fund (PF) and gratuity as the three wage code bills will likely come into effect from 1st April 2021.

Gratuity and PF may increase whereas the take-home salary might suffer a dip.

Under the new law, the allowances can be a maximum of 50 per cent of the total salary. This means that the basic pay (basic pay and dearness allowance in government jobs) should be 50 per cent or more of the total salary from April.

This will change the salary structure of most of the employees, as the non-allowance portion of the salary is usually less than 50 per cent of the total salary.

Since, the PF is based on basic pay, it is set to see an increase, decreasing thetake-home or hand-in-hand pay. This expansion of PF and gratuity will increase the amount that an employee receives upon retirement and also shoot up the expenditure cost of companies.

The new draft rules also propose to increase the maximum hours of work to 12 hours.

Moreover, it also allows including additional work between 15 minutes to 30 minutes as overtime as extra work of less than 30 minutes did not qualify for overtime before. The rules prohibit more than five hours of continuous work for any employee, DNA India reports.

Hence, instructions have been rolled out to give workers a rest of half an hour after every five working hours.