New wage rules to be implemented from April 2021.
In the next Financial Year (FY) of 2021-22 the employees in hand component of salary might come down. The government notified new drafted rules under the wage rules and the companies will now have to restructure the employee’s pay packages. The Code on Wages 2019 is under which the new compensation rules are introduced. All of these changes are expected to see changes from April next year.
The new rule suggests that the basic pay of the salaries will have to rise. This will further result in proportional rise of gratuity payments and the contribution towards the Provident Fund (PF) by the employees’. The retirement collection of the employees will grow as the lower take home salary will contribute more towards the retirement. This rule will be impacting the private sector employees more as they already get higher allowances on their salaries.
According to the new rule the employer will now have to raise the basic pay of the employees to meet the 50% basic pay requirement. Experts suggest that the new changes made to the take- home pay will provide better retirement benefits and social security.
The Brief. Sign up to receive the top stories you need to know right now.