• हिन्दी
  • ગુજરાતી
  • বাংলা
  • తెలుగు
  • मराठी
  • ಕನ್ನಡ
  • money9
  • Insurance
  • Saving
  • Mutual Funds
  • Mirae Asset MF
  • Breaking Briefs
downloadDownload The App
Close
  • Home
  • Videos
  • Podcast
  • Banking
  • Bulletin
  • Gold
  • Healthcare
  • Real Estate
  • Tax
  • Travel
  • Survey 2023
  • Survey Report
  • Breaking Briefs
  • Insurance
  • Savings
  • Loan
  • Crypto
  • Investment
  • Mutual Funds
  • Real Estate
  • Tax
  • Exclusive
  • Home / Provident Fund

Labour codes on the cards; workers to see reduction in take-home pay

Once the wages code comes into force, there will be significant changes in the way basic pay and provident fund of employees are calculated

  • Press Trust of India
  • Last Updated : June 6, 2021, 11:01 IST
  • Follow
Representative Image
  • Follow

New Delhi: The four labour codes are likely to see the light of day in a couple of months as the Centre is now keen to go ahead with the implementation of these laws, which among others will result in reduction in take-home pay of employees and higher provident fund liability of companies.

Once the wages code comes into force, there will be significant changes in the way basic pay and provident fund of employees are calculated.

Four codes The labour ministry had envisaged implementing the four codes on industrial relations, wages, social security and occupational health safety & working conditions from April 1, 2021. These four labour codes will rationalise 44 central labour laws.

The ministry had even finalised the rules under the four codes. But these could not be implemented because many states were not in a position to notify rules under these codes in their jurisdiction.

Labour is a concurrent subject under the Constitution of India and therefore both the Centre and states have to notify rules under these four codes to make them the laws of the land in their respective jurisdictions.

“Many major states have not finalised the rules under four codes. Some states are in the process of finalising rules for the implementation of these laws. Central government cannot wait forever for states to firm up rules under these codes. Therefore it is planning to implement these codes in a couple of months as some time would have to be given to establishments or firms to align with new laws,” a source told PTI.

States have circulated draft rules According to the source, some states had already circulated the draft rules. These states are Uttar Pradesh, Bihar, Madhya Pradesh, Haryana, Odisha, Punjab, Gujarat, Karnataka and Uttarakhand.

Under the new wages code, allowances are capped at 50 per cent. This means half of the gross pay of an employee would be basic wages. Provident fund contribution is calculated as a percentage of basic wage, which includes basic pay and dearness allowance.

The employers have been splitting wages into numerous allowances to keep basic wages low to reduce provident fund and income tax outgo. The new wages code provides for provident fund contribution as a prescribed proportion of 50 per cent of gross pay.

After the implementation of new codes, the take-home pay of employees would reduce while provident fund liability of employers would increase in many cases.

Once implemented, employers would have to restructure salaries of their employees as per the new code on wages.

Besides, the new industrial relation code would also improve ease of doing business by allowing firms with up to 300 workers to go ahead for lay-offs, retrenchment and closure without government permission.

At present all firms with up to 100 employees are exempted from government permission for lay-off, retrenchment and closure.

Published: June 6, 2021, 11:01 IST

Download Money9 App for the latest updates on Personal Finance.

  • EPFO
  • Labour Code
  • Provident Fund

Related

  • Labour groups demand special fund for informal sector in Budget’24
  • Budget 2024 may increase PF limit after 10 years
  • Govt makes major reform in EPS pension scheme
  • Has your PF been credited to your account? Here’s how to check
  • EPFO eases rules for verification, withdrawal
  • Gratuity payment: Who gets it and how much?

Latest

  • 1. Know the correct way to get KYC done!
  • 2. Why health insurance claim gets rejected?
  • 3. Power to Respond!
  • 4. What is Asset Under Management?
  • 5. No Worries on Medical Expenses!
  • Trending Stories

  • रिलायंस का जून तिमाही में शुद्ध लाभ 78 प्रतिशत उछलकर 26,994 करोड़ रुपये के उच्चतम स्तर पर
  • भारत के पास मोटर वाहन घटकों पर लगाए गए शुल्क के विरुद्ध जवाबी शुल्क लगाने का आधार नहीं:अमेरिका
  • इंडिक्यूब स्पेसेज का आईपीओ 23 जुलाई को खुलेगा; मूल्य दायरा 225-237 रुपये प्रति शेयर
  • हाजिर मांग के कारण कच्चे तेल के वायदा भाव में तेजी
  • पाकिस्तान पर चालू वित्त वर्ष में 23 अरब अमेरिकी डॉलर के विदेशी ऋण का बोझ
  • TV9 Sites

  • TV9 Hindi
  • TV9Telugu.com
  • TV9 Marathi
  • TV9 Gujarati
  • TV9 Kannada
  • TV9 Bangla
  • News9 Live
  • Trends9
  • Tv9tamilnews
  • Assamtv9
  • Malayalamtv9
  • Money9 Sites

  • Money9 Hindi
  • Money9 English
  • Money9 Marathi
  • Money9 Telugu
  • Money9 Gujarati
  • Money9 Kannada
  • Money9 Bangla
  • Money9live
  • Topics

  • Insurance
  • Savings
  • Loan
  • Stocks
  • Mutual Funds
  • Real Estate
  • Tax
  • Crypto
  • Exclusive
  • Follow us

  • FaceBook
  • Twitter
  • Youtube
  • Instagram
  • Linkedin
  • Download App

  • play_store
  • App_store
  • Contact Us
  • About Us
  • Advertise With Us
  • Privacy & Cookies Notice
  • Complaint Redressal
  • Copyright © 2025 Money9. All rights reserved.
  • share
  • Facebook
  • Twitter
  • Whatsapp
  • LinkedIn
  • Telegram
close