The four labor codes are expected to come into force in a few months. Now the Center has decided to move towards implementing these laws. This will cut the take-home salary of the employees and increase the provident fund liability of the companies. Once the wage code is implemented, there will be major changes in the way employees calculate Basic Pay and Provident Fund. The Labor Ministry had thought of implementing four codes on Industrial Relations, Wage, Social Security and Occupational Health Safety from April 1, 2021.
States will also have to decide rules
The ministry had also fixed the rules under the four codes. But these could not be implemented as the states were not in a position to notify the rules under these codes in their jurisdiction. Under the Constitution of India, labor comes under the Concurrent List and hence these four codes have to notify the rules falling under them to make laws in their jurisdiction.
A source told PTI that many big states have not fixed the rules under the four codes. Some states are in the process of laying down rules to implement these laws. The central government cannot wait any longer for the states to decide the rules under these codes. Therefore, it is planning to implement these codes in a few months, as it is necessary to give some time to the establishments and companies to work according to the new laws.
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According to the source, some states have already decided the draft rules. These states are Uttar Pradesh, Bihar, Madhya Pradesh, Haryana, Odisha, Punjab, Gujarat, Karnataka and Uttarakhand. Under the new pay code, the limit of allowance has been kept at 50 per cent. This means that half of the employee’s total salary will be basic pay. Provident fund contribution is calculated as a percentage of basic pay, which includes basic pay and dearness allowance.