The Indian government on 21 November consolidated 29 Labour Laws into four comprehensive Labour Codes, namely — the Code on Wages (2019), the Industrial Relations Code (2020), the Code on Social Security (2020) and the Occupational Safety, Health and Working Conditions Code (2020).
The amendment “streamlines compliance, modernises outdated provisions, and creates a simplified, efficient framework that promotes ease of doing business while safeguarding workers’ rights and welfare”, the Centre said in its release.
What is the uniform definition of wages?
In particular, the Code of Wages and Code on Social Security are set to directly impact workers’ salary structure, including how much of your pay is now basic salary, and the inclusion of pension, EPF, and gratuity in your salary breakdown.
The reforms have issued a “uniform definition of wages”, per which “wages” now include basic pay, dearness allowance (DA), and retaining allowance. Further, 50% of the total remuneration (or such percentage as may be notified) shall be added back to compute wages, ensuring consistency in calculating gratuity, pension, and social security benefits.
How does new labour code impact your salary structure?
As per the codified definition, all parts of your salary structure will now be treated as remuneration unless exempted (and such parts have been capped at 50%), this broadly means that elements such as Provident Fund (PF), Employees’ State Insurance Corporation (ESIC), Workmen’s Compensation, and maternity benefits will see tweaks.