New Wage Code: Crucial meeting of Labour Ministry with industry today, discussion on allowance and salary structure on the cards

New Delhi: A Crucial meeting of the Labour Ministry with industry is scheduled for today (22 August) where both the sides are expected to discuss on allowance and salary structure under the New Wage Code. In the meeting between the Labour Ministry and industry, an important matter to be discussed is that Allowances cannot be more than 50% in salary. Industry has also sought more clarity on salary structure before new law on Wage Code is being implemented

If it is agreed upon that Allowances cannot be more than 50% in salary, then take home salary will be less and investment in Provident Fund (PF) will increase. The industry believes the new wage code is expected to increase the burden in the short term. Therefore, the industry should get 2-3 months to implement the new rules. 

Another meeting will be held with the states on August 24-25 on the wage code issue. The government wants to implement the new law simultaneously across the country. 

The four labour codes on wages, social security, industrial relations and occupation safety, health and working conditions which were likely to be implemented from July 1, did not kick in. 

Once implemented, the new wage code will impact working hours, salary restructuring and PF contribution, encashing of Earned Leaves among the prominent ones. Since these are early speculations, employees will have to wait till government officially notifies the rules.

Till now, 23 states have pre-published draft rules on these laws, while the Centre has completed the process of finalising the draft rules on these codes in February 2021. The central government has notified four labour codes, namely, the Code on Wages, 2019, on August 8, 2019, and the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020 on September 29, 2020. (Also read: HDFC Bank ATM in Pune gutted in fire, cash worth 3.98 lakh burnt by thief)

Since labour is a concurrent subject, the Centre wants the states to implement these as well in one go, as has been reported earlier.