7th Pay Commission latest news: EXPLAINED! How your salary, PF, Gratuity may be affected after new Wage Code implementation

New Delhi: The new Wage Code, once implemented (expectedly in April this year) may bring a host of changes in the employees’ pay structure that includes its take home pay, PF and Gratuity component.

The government’s notification on Code on Wages 2019 may reduce the take-home pay of employees next financial year ie, April 2021 while components like PF and Gratuity might rise. This is based on the grounds that the new wage code mentions provision entailing that the employee’s basic salary will be at least 50 percent of his/her net monthly CTC. Hence, if this provision comes into effect, it will mean that employees will not be able to get more than 50 percent of his/her net monthly salary in form of allowance.

This also means that there will be a consequent rise in gratuity and PF contribution of the employee. Hence, while the take home pay of the employees may be reduced, the Gratuity and PF component may rise.

On February 8, Labour Secretary Apurva Chandra in a media briefing said that he Ministry of Labour and Employment is likely to complete the process to finalise the rules under the four labour codes paving the way for making reforms are reality soon.

Besides, the ministry is also progressing to roll out a web portal by June 2021 for registration and other facilities of workers in the unorganised sector, including gig and platform workers and migrant workers as enshrined in her budget speech this year by Finance Minister Nirmala Sitharaman.

This ministry would soon be in a position to bring into force the four Codes, viz., Code on Wages, Industrial Relations, Occupational Safety, Health and Working Conditions (OSH) and Social Security Codes, Chandra said.

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The labour ministry had envisaged implementing the four labour codes from April 1 this year in one go. The ministry is in the final leg of amalgamating 44 central labour laws into four broad codes on wages, industrial relations, social security and OSH. The ministry wants to implement all four codes in one go.