New Wage Code: New Wage Code for employees can be implemented soon. After its implementation, everything from salary of employees to pension is certain to be affected. Many such provisions have been made in it, which is important for you to know.
New Wage Code: New Wage Code for employees can be implemented soon. After its implementation, everything from salary of employees to pension is certain to be affected. Many such provisions have been made in it, which is important for you to know. In many media reports, it has been claimed that the new wedge code will be applicable from April 1, but nothing has been said officially by the government so far.
What’s in the new wedge code?
According to the Wage Code Act, 2019, the basic salary of an employee cannot be less than 50 percent of the company’s cost (CTC). Now many companies reduce the basic salary significantly and give more allowances from above so that the burden on the company will be reduced.
Salary structure will be completely changed
With the implementation of the Wage Code Act, 2019, the salary structure of employees will be completely changed. The ‘Take Home Salary’ of the employees will decrease, because with the increase of Basic Pay, the employees’ PF will be cut more, ie their future will be more secure. Along with the PF, the contribution will also increase in the Monthly Gratuity. The employee will get more amount on retirement.
Take home salary will decrease, retirement will improve
If the PF of employees is cut more by increasing the basic pay, then their take-home salary will decrease. But, their future will be more secure. This will give them more benefit on their retirement, as their contribution to the Provident Fund (PF) and Monthly Gratuity will increase.
Headache will increase for companies
Let us tell you that the CTC of employees depends on many factories. Such as basic salary, house rent (HRA), PF, gratuity, LTC and entertainment allowance etc. After the implementation of the new pay code rule, companies will have to decide that other factors to be included in the CTC should not be more than 50%, except basic salary. This can increase the headache of companies.
Higher salaries may increase the difficulty
The effect of the cut in take-home salary will be very less for the low and middle income people. But those with high incomes may get a big shock. If the PF contribution of the high earners will increase more, then their take home salary will also be enough, because the basic salary of the employees whose salary will be higher will also be higher, so PF Yogada will also be cut more. Gratuity will also cut more of such employees. Basic salary is taxable, so tax will be cut more if salary is high.
