Employees' salary structure likely to change from April 1, those with high allowance may see pay cut

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New Delhi: Employees can expect a major change in their salary structures if the government notifies the new wage code. The rules are likely to kick in from April 1.

The government's notification on Code on Wages 2019 may reduce the take-home pay of employees. 

Under the new rules, allowances would be a maximum of 50 per cent of the total salary. This will result in mandatory changes in an employee's salary structure.

Employees whose basic salary is already 50 per cent or more will not be affected. But those with basic salary less than 50 per cent will see a change in their take-home salary.

In addition to this, there may be significant changes in the provident fund (PF) and gratuity.

Due to the increase in basic salary, the share towards PF will also increase, since it is calculated on the basis of basic salary.

The new rules will likely affect the salary structure of high-paid employees with a high allowance component. Increasing PF and gratuity could also increase the cost of companies as their contribution towards these would increase proportionately.

There could also be a change in working hours for employees. The maximum working hours in offices could be increased to 12 hours.

According to the new law, 15-30 minutes of extra work done would qualify as overtime. Currently, less than 30 minutes of extra work is not considered for overtime.

The new rules also state that employees would have to be given a break of half an hour after every five hours of work.

Parliament had passed four codes on four broad codes on wages, industrial relations, social security and occupational safety health & working conditions (OSH) which would ultimately rationalise 44 central labour laws.