12 hours a day to 3 weekly offs: Here are salient features of the new labor code

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A new labor code is set to be implemented in the country.  Under the new code, the working hours will be increased from 8-9 hours a day to 12 hours. However, they will have to offer the employees three weekly offs.

Working days in a week will be reduced to four days but total working hours will not be affected. The new wage code mandates total working hours of 48 per week.

The employees’ take-home salary will also change significantly as the basic salary will be at least 50 percent of the gross monthly salary under the new wage code.  This will also increase the PF contributions made by employees and employers, and the take-home salary will be affected more by the employees in the private sector. Under the new labor laws, the retirement corpus and gratuity amount will increase.

A company shall have to pay the full and final settlement of wages and dues within two days of an employee’s last working day following their resignation, dismissal, or removal from employment and services, according to the new wage code.

Currently, the common practice followed by businesses is to pay the complete settlement of salary and dues after 45 days to 60 days from an employee’s last working day, and in some cases, it goes up to 90 days.

The new reform is part of the four labor codes — pay, social security, labor relations, occupational safety, health, and working conditions.

, “Where an employee has been – (i) removed or dismissed from service; or (ii) retrenched or has resigned from service, or became unemployed due to closure of the establishment, the wages payable to him shall be paid within two working days of his removal, dismissal, retrenchment or, as the case may be, his resignation,” the new wage said.

The four new labor codes were formed by reviewing and combining the previous 29 Central labor laws.

According to Minister of State for Labour and Employment Rameshwar Teli’s written response to the Lok Sabha, only 23 states and union territories (UTs) have released the draft guidelines under the Code on Wages.

If the wage code is implemented, then businesses would need to realign their payroll processes and work around the timeliness and procedures for deriving the complete settlement of wages within two working days.

But the code also allows individual states to set the full and final settlement timeline based on what the state governments think is reasonable.

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