New Labor Code: Industry organizations have demanded from the government to give a concession in the new Labor Code by limiting the allowances to 50 per cent of the CTC.
The new labor code was to come into force from April 1 this year, but the Center has postponed it for the time being. The chances of this bill being implemented recently seem to be less. A big reason behind this is the uncertainty created by the second wave of Kovid-19. Even though everyone is troubled in the bad times of the Corona epidemic, the avoidance of the Labor Code for Employees is a good news. In this code, companies are seeking concessions due to the rule of keeping the allowances limited to 50 per cent of CTC. If the government accepts this demand then the employees will benefit.
Due to this, there will be no reduction in the salary received by the employees. At a time when the threat of Kovid is spreading fast, this is good news for employees.
Companies not ready due to Kovid
On the other hand, even companies are not ready to implement it right now. Now companies will get time to prepare the salary structure of their employees according to the new Labor Code.
Due to the second wave of Kovid epidemic, the functioning of all the companies has started derailing again.
Industry organizations demanded a concession
According to reports, companies have demanded from the government to give concession to companies with the decision to limit the component of allowances in the Labor Code to 50 per cent.
Companies say that they will be financially disadvantaged by the rules made in the new labor code. Many industry associations have also demanded exemption from the provisions made in the Wage Code in the states.
What will be the effect on you?
The most important employee salary in the new labor code is a rule to restrict allowances to 50 per cent of CTC. This means that the basic salary of any employee should be 50 percent of his CTC.
Companies will have to apply this rule in the salary of employees as soon as the new labor code comes into force. Currently, most companies do not give 50% of CTC as basic salary to employees.
It is feared that after the new law comes, there will be a decrease in the salary of the employees. If 50 percent of your CTC is basic salary, then the money going for provident fund will increase. 12% of the basic salary is invested in the provident fund which goes towards retirement planning – ie 15 years of lock-in. If the basic salary increases, then the money going to PF will also be more and the salary that will come in hand will decrease.
In such a situation, if this Labor Code is deferred for some time or as companies are demanding, if they are given a concession from the government in keeping the allowances on the 50 per cent limit then the employees It can benefit.
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