Utility: The government is going to implement new labor law from July 1! Working hours, PF, and salary will change!


The central government is planning to implement the new labor laws from July 1, 2022. If implemented, there will be a significant change in office working hours, Employees' Provident Fund (EPF) contribution, and in-hand salary. Though there is a possibility of an increase in office hours and PF contribution, the in-hand salary can be deducted.


The government is working to implement a set of four new labor codes at the earliest. The government believes that the new labor laws will boost investment and increase employment opportunities in the country.

The newly enacted labor codes set out a series of reforms related to wages, social security (pension, gratuity), labor welfare, health, safety, and working conditions (including for women).

Changes when the new labor law comes into force.

1. If the new labor laws come into force, it will allow companies to make significant changes in office working hours. They can increase the office working hours from 8-9 hours to 12 hours. But they have to compensate their employees by giving them three weekly holidays.

2. Additionally, the maximum number of overtime hours for workers in a quarter has been increased from 50 hours (under the Factories Act) to 125 hours (in the new labor code) in all industries.


3. There will be a significant change in the take-home salary component and employers' contribution to the provident fund. The new codes may place the employee's basic pay at 50% of the gross pay. This will increase the PF contribution of the employee and the employer. There will be a reduction in take-home pay for some employees, especially those in the private sector.

4. There will also be an increase in the amount of money and gratuity received after retirement. This will enable the employees to lead a better life after retirement.

5. The Government has also targeted to rationalize the leave taken by an employee in the course of his employment, carry forward the leave to the next year, and encashment of leave during the period of employment. The new labor codes reduced the eligibility requirement for leave from 240 days of work to 180 days of work a year.