A four-day work week, possible changes in take-home salary, higher PF savings and new gratuity rules — India’s new labour code regulations could change how millions of employees work and get paid.
The government has notified rules linked to the new labour codes, which may reshape salary structures, workplace systems and company compliance processes. States may also move forward with implementation.
The Centre has replaced 29 labour laws with four new labour codes. These cover wages, industrial relations, social security, and workplace safety and conditions. Here is a closer look at the key rules.
One of the biggest talking points is the work-hour rule. Employees who are not paid on a daily wage basis may work up to 12 hours a day, with the total weekly working limit capped at 48 hours.
This means some companies may choose a four-day work model, where employees work longer hours but get three days off each week.
Under the new rules, basic salary must make up at least 50% of the total cost-to-company (CTC).
This could increase contributions towards the Provident Fund (PF) and gratuity. However, for some employees, it may also reduce monthly take-home pay.
The provident fund calculation will be based on a higher basic salary.
As a result, both employee and employer contributions towards PF may increase. While this could reduce in-hand salary for some, retirement savings may become larger over time.
The new labour code also brings
Fixed-term employees will become eligible for gratuity after completing one year of service. For regular employees, the existing rule of five years of service for gratuity remains in place.
The rules make it compulsory for employers to pay minimum wages to all employees.
Equal pay for men and women doing the same work will also be mandatory.
Daily wage workers must be paid on the same day. Weekly wage workers should receive payment on the last working day of the week, while salaries for monthly workers must be paid by the seventh day of the next month.
If an employee resigns or is terminated, full and final settlement must be completed within two working days. Overtime work will attract double wages.
Employers will be required to clearly share information related to minimum wages, working hours, wage periods, salary payment dates and other related details with employees.
Employees falling within the prescribed earning limit will be entitled to a bonus.
The minimum bonus will be 8.33%, while the maximum limit can go up to 20%.
Companies with 100 or more employees may form a works committee.
Businesses employing 20 or more workers must set up a Grievance Redressal Committee (GRC), which must include women members. Complaints will need to be resolved within 30 days.
A union with support from at least 51% of workers will be treated as the negotiating union. If that is not possible, a Negotiating Council will be formed.
Any change in service conditions will require a 21-day notice.
For layoffs involving 50 to 299 workers, companies will need to inform the government. Affected workers must receive 50% of wages and dearness allowance along with a one-month notice. Compensation based on 15 days of average pay will also be provided.
If layoffs affect more than 300 employees, government approval will be compulsory, along with a three-month notice period.
In case a company shuts down, an application must be filed 90 days in advance, and workers will receive 15 days’ salary.
Establishments with 10 or more employees must complete registration within 60 days.
Companies will also have to inform authorities when operations stop or restart. Appointment letters must be issued to all employees.
The new rules make workplace safety the responsibility of employers.
Companies may have to create Safety Committees as directed by the government. Free health check-ups for employees will also be required.
In the construction sector, businesses with more than 250 workers must appoint a safety officer. Mines with over 100 workers will also require one.
A canteen will be compulsory at workplaces with 100 or more workers. Mines and construction sites employing over 500 workers must have an ambulance room.
Women will be allowed to work across all sectors.
If women work before 6 am or after 7 pm, proper safety arrangements must be ensured. Women will also be allowed to work night shifts. There may be restrictions on employing pregnant women in hazardous jobs.
Special rules will apply where there are more than 10 migrant workers, including a yearly journey allowance.
If a contractor fails to pay wages, the responsibility will fall on the company.