The much-discussed New Labour Codes which were to be implemented on 1st July 2022 has been postponed as of now. These 4 Labour Codes are an amalgamation of the 29 Labour laws. According to the Ministry for Labour and Employment, only 23 states and UTs have released the draft rules under the Code of Wages.
The introduction of the new Labour Codes brings about much-needed reforms in the working conditions of employees in the country. They bring about changes relating to wages, social security, labour welfare, health, safety, and working conditions of employees.
Let us now delve into a few takeaways from these new codes when they are implemented by the Government.
Capping of Daily Working hours
The new labour codes allow the capping of daily working hours from the current 8 to 12 hours. However, the weekly work hours remain capped at 48 hours. This means that if any employee prefers a 4-day work week, he or she can increase the daily working hours to 12 and generate the required working hours for the week.
The new code also allows an increase in maximum overtime hours from 50 hours (as per the Factories Act) to 125 hours in any quarter across industries. The law will enable companies to adopt the 4-day week and employ workers on the weekend, if necessary.
However, the 4 day week could also be a double-edged sword. On the one hand, the employees would benefit from a more extended rest period, but on the other hand, it entails longer working hours during the weekdays which may negatively affect the workers’ health. In the same vein, the increase n overtime may enhance the earnings but it will be at the expense of longer working hours or probably working on weekends as well.
Changes in take-home salary
The take-home salary may get reduced especially for employees of the private sector. On implementation of the new codes, the basic salary would be capped at 50% of the gross salary. However, it proposes to increase the PF contributions of both the employees and employers. The changes will also bring about an increase in the retirement corpus and gratuity amounts. This will be beneficial to all employees during their retirement days.
Changes in leave availed
The new codes hope to rationalize the leave an employee can avail of during the course of their employment, carry-forward of leave to a succeeding year, and encashment of leave during the period of employment. The new labour codes have reduced the eligibility requirement for leave from 240 days of work to 180 days of work in a year.
The effect on the unorganized sector
The New Labour codes allow workers of all sectors including the unorganized sector to avail the benefits of the ESIC scheme. A national database of workers in the unorganized sector will be created through registration on a portal under the new labour codes. This will provide medical care to the employees and their family members who work in the unorganized sector.
The ESIC infrastructure that includes the hospitals, dispensaries, and branches is being expanded up to the district levels. On implementation, all 740 districts will get this facility.
Any worker engaged in hazardous work would be given the benefit of ESIC. Similarly, gig workers engaged in new technology will also become eligible to become ESIC members. Plantation workers will also be eligible for its benefits. Institutions involved in hazardous work have to compulsorily register for ESIC.
These reforms hope to empower the workers in the organized and unorganized sectors. This will herald a major change in labour laws in the country and bring in the much-needed changes that have been discussed about for decades.
GetifyHR is fully prepared to guide our valued clients about all aspects of the new labour codes as and when they are implemented. Our professional team is fully knowledged about these changes and is capable of providing immediate solutions to any doubts and queries regarding these laws. Our outsourcing payroll package will also be able to support these changes so that our associates can be fully compliant during the proposed changeover to the new laws.