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India likely to implement new labour laws in 2022 fiscal year

According to a senior government sources, India is set to implement four new labour regulations covering pay, social security, industrial relations, and occupational safety by the following fiscal year beginning in 2022. A variety of facets of employment and work culture, in general, may alter as a result of these new standards, including employees’ take-home pay, working hours, and the number of weekdays.

Employees in India may be able to enjoy a four-day workweek beginning next year if the new labour regulations are enacted, as opposed to the present five-day workweek. Employees will have to work for 12 hours on those four days in that instance, as the labour ministry has stated that the 48-hour weekly work requirement must be met even if the proposal is approved.

The labour regulations take on particular relevance in view of the fact that, once adopted, employees’ take-home pay will be reduced, and businesses will be responsible for a higher provident fund burden.

According to specialists evaluating the proposed labour regulations, the new legislation will significantly alter how employees compute their basic salary and provident fund contributions (PF). Employees’ monthly contributions to their PF accounts will grow under the new guidelines, while their monthly in-hand compensation would decrease.

The regulations limit allowances to 50% of the salary, implying that half of the salary is basic wages, and provident fund contributions are computed as a percentage of the basic wage, which includes both the basic pay and the dearness allowance (DA).

The employer’s percentage-based contribution to the PF balance is determined by the employee’s basic wage and dearness allowance under current labour standards. For example, if an employee’s monthly compensation is $50,000, they may receive 25,000 in basic pay and the remaining 25,000 in allowances. If the basic pay is increased, however, more PF will be deducted, lowering the in-hand salary and increasing the employer/company contribution.

Because labour is a concurrent issue, the central government has already finalised the laws under the four labour codes, and states must now draught their own regulations.

“The four labour codes are likely to be implemented in the next financial year of 2022-23,” a senior government official was cited as saying by media. “A big number of states have finalised draught rules on these.” “In February 2021, the Centre completed the process of finalising the draught rules for these codes.” However, because labour is a concurrent concern, the Centre wants the states to adopt both at the same time.”

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