New Delhi: As the second wave of coronavirus is affecting the whole country and many states are under complete lockdown, the Central government may not implement the labour reforms under the Code of Wages, 2019 anytime soon. Earlier also, the Central government had deferred the implementation of the labour reforms that were supposed to come into effect from April 1 this year. Also Read - Companies Offer Bonuses, Increments & More Leaves To Keep Employees in Good Spirits
According to a report by The Economic Times, the ongoing pandemic has kept several states busy, and they are now going slow on readying the framework for the implementation of the labour codes. Even though the Centre was asking the states to frame the draft rules quickly, it is no longer pursuing states with the same interest due to the ongoing pandemic. Also Read - Uttar Pradesh Govt Makes BIG Announcement: COVID-affected Employees to Get 28-day Paid Leave
However, the delay in implementing the labour code is likely to help Indian corporates that were worried about the complex changes required in order to comply with the new codes. The delay means the corporates will have more time to realign employee salary structures as mandated under new rules. Also Read - No Change in Salary Structure: Govt Defers New Wage Code, Your Take Home Salary Will Remain Same
Earlier, the companies had urged the Centre to relax the 50 per cent mandatory cap on the allowance component of wages under the new rules.
Saying that the move would affect them financially during the pandemic, the Industry associations had reached out to respective state governments to delay the drafting of rules for implementation of the labour codes.
While it is yet to be seen whether the new labour codes are implemented, it is unlikely that the rules will come into effect this year. This clearly means that the employees will not see a reduction in their take-home salaries in 2021, but social security benefits will remain lower.
As per updates, the Union labour ministry earlier had planned to implement four labour codes — industrial relations, wages, social security and occupational health safety and working conditions — from April 1. These consolidated labour codes will subsume all 29 existing central labour laws.
One of the important rules under the new labour codes is the plan to cap employee salary allowances at 50 per cent of CTC (cost-to-company). This means the basic salary of an employee has to be at least 50 per cent of CTC. But when the new labour codes will come into effect, companies will have to change employee compensation structure to meet the requirement. However, it will be a complex process as most employers do not give 50 per cent salary as basic pay to employees at the moment.