India is set to implement four new labour codes covering wages, social security, industrial relations, and occupational safety, which could bring significant changes to the employment landscape. One of the potential changes is the introduction of a four-day workweek instead of the current five-day workweek. However, this would mean that employees will have to work 12 hours per day to meet the 48-hour weekly work requirement.
The new labour codes also entail changes in the calculation of basic pay and provident fund (PF) contributions, which may result in a reduction of employees' take-home pay. Under the new regulations, only 50% of an employee's salary can be considered as allowances, with the remaining amount being basic wages subject to PF contributions. This means that as an employee's basic pay increases, the PF deduction will also increase, resulting in a decrease in their in-hand salary.
The employer's contribution towards the PF balance is currently based on the employee's basic pay and dearness allowance. However, under the new codes, this contribution will be calculated as a percentage of the basic wage, which includes the basic pay and dearness allowance. For instance, if an employee's salary is ₹50,000 per month, with a basic pay of ₹25,000 and allowances of ₹25,000, the employer's contribution towards the PF will be based on the basic pay of ₹25,000 only.
The central government has already established the rules under the four labour codes, and now states are required to develop their own regulations as labour is a concurrent subject.
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