The Government on Friday consolidated 29 labour laws into four comprehensive Labour Codes. The four Labour Codes include the Code on Wages, the Industrial Relations Code, the Code on Social Security and the Occupational Safety, Health and Working Conditions Code. The reform streamlines compliance, modernizes outdated provisions and safeguards the rights and welfare of workers.
Here are key reforms under the New Labour Codes and how they impact your take home pay, pension and gratuity:
Uniform definition of wages
The new ‘Wages definition will now include basic pay, dearness allowance and retaining allowance. Wages have been introduced for calculating benefits related to gratuity, pension and social security benefits. According to the rule, 50 percent of the total remuneration shall be added back to compute wages, ensuring consistency in calculating gratuity, pension and social security benefits.
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Universal minimum wages
The Code establishes a statutory right to minimum wages for all employees across both organized and unorganized sectors. A statutory floor wage shall be set by the government based on minimum living standards which will have scope for regional variation. No state can fix minimum wages below this level.
Universal coverage for wage payment
Provisions will be made to ensure timely payment and prevent unauthorized deductions that will apply to all employees, irrespective of wage limits. Currently it applies only to employees earning up to Rs 24,000 per month.
Gratuity for fixed term employees
Fixed-term employees become eligible for gratuity after one year of continuous service. Earlier it was five years.
Overtime compensation
Employers must pay all employees overtime wages at least twice the normal rate for any work done beyond the regular working hours. Appointment letters specifying job details, wages and social security will be given to all employees.
Commuting accidents covered
Accidents during travel between home and workplace are now deemed employment-related which will qualify for compensation.
Gender equality in employment
Employers shall not discriminate based on gender, including transgender identity, in recruitment, wages and employment conditions for similar work.
Work from home provision
Work from home is permitted in the service sectors by mutual consent.
Compensation to migrant workers
The definition of inter-state migrant workers now covers workers employed directly through contractors or who migrate on their own. Benefits will include a lump-sum annual travel allowance to the native place once in 12 months and portability of the public distribution system and social security benefits across states.
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