Labor laws going to change from July 1: There will be significant changes in working hours, salary, and PF!

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IOP

Labor Act 2022: The new labor laws of the central government are going to be implemented with full potential from July 1, 2022. This will lead to massive changes in all industries and sectors. This will lead to drastic changes in the working hours of employees, from a provident fund to a salary structure.

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However, no official information has come in this regard yet. The new labor laws will have an impact on wages, social security (pension, gratuity), labor welfare, health, safety, and working conditions (including women).

Reports suggest that so far 23 states, including Uttarakhand, Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Odisha, Arunachal Pradesh, Haryana, Jharkhand, Punjab, Manipur, Bihar, Himachal Pradesh, and the Union Territories of Jammu and Kashmir, have implemented new labor laws. 

These states have prepared state labor codes and rules based on new codes on wages 2019 and Industrial Relations Code 2020, Social Security Code 2020, and Occupational Safety, Health and Working Conditions Code 2020, all passed by Parliament.

Major Changes from 1st July 2022

Working Hours

There will be a drastic change in the working hours of employees of all sectors. At present, the working hours at the national level for workers in factories and other such workplaces are based on the Factories Act, 1948. However, it is governed by the Shops and Establishment Act of each state for office workers and other employees.

As per the new labor laws, the daily working hours have been fixed at 12 hours and the weekly working hours are 48 hours. This means companies/factories can make it a four-day work week. Overtime has been increased from 50 hours to 125 hours in a quarter across all industries.

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Wage Structure of Employees

The new labor laws suggest that an employee's basic pay should be at least 50% of the gross salary. As an effect, employees will contribute more to their EPF accounts and the gratuity deduction will also increase thereby reducing the take-home pay of most employees.

Number of holidays The number of holidays in

a year will remain the same but employees will now get leave for every 20 working days instead of 45, which is good news. In addition, new employees will be eligible to earn leave after 180 days of employment instead of 240 days of work as applicable now.

Provident Fund Contribution

Another major change that is going to come under the new labor law is the ratio of take-home salary and contribution to the provident fund of employees and employers. Now the basic salary of the employee should be 50% of the gross salary. Employees' and employers' PF contributions will increase, take home salaries will decrease, especially for those working in the private sector.