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Salary, PF, Working Hours: List of Key Changes to Come Into Effect Under New Labour Laws From July 1

Under new labour laws, the regulations related to working hours of employees, provident fund and salary structures will see drastic changes.

Updated: June 23, 2022 3:49 PM IST

By Business Desk | Edited by Manmath Nayak

New Labour Laws, full and final settlement, new wage code
At present, companies pay their employees full and final settlement after 45-60 days from their last working day.

New Labour Laws Latest Updates: The Central government is planning to implement a series of new labour laws from July 1, 2022. The new rules, once implemented, will bring massive changes to all industries and sectors in India. Under new labour laws, the regulations related to working hours of employees, provident fund and salary structures will see drastic changes.

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While reports indicate that the Centre is all set to implement these rules from next montm, no official notification, however, has been issued yet. The reforms will tackle areas such as wages, social security (pension, gratuity), labour welfare, health, safety and working conditions (including that of women).

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As per reports, 23 states have framed state labour codes and rules based on the new Code on Wages, 2019, and the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020, all of which have been passed by the Parliament.

Significantly, Uttarakhand, Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Odisha, Arunachal Pradesh, Haryana, Jharkhand, Punjab, Manipur, Bihar, Himachal Pradesh and UT of Jammu and Kashmir are the states that have framed rules under new labour laws.

List of key changes to come into effect under new labour laws: 

Working Hours

One of the key changes that the new rules would bring is working hours for employees in all sectors. At present, the working hours are governed by the Factories Act, 1948 at the national level for workers in factories and other such workplaces, and by the Shops and Establishment Acts of each state for office workers and other employees. However, as part of the new rules, daily and weekly working hours have been capped at 12 hours and 48 hours. This will let firms to bring in 4-day workweeks, while overtime has been increased from 50 hours to 125 hours in a quarter across industries.

Salary Structure

As part of the new labour laws, the basic salary of an employee will have to be at least 50 percent of the gross salary. As an effect, the employees will be making more contributions to their EPF accounts and gratuity deductions will also increase which will decrease take-home salaries of most employees.


The Central government is planning to rationalise leave schemes under the new labour laws. While the quantum of leaves in a year will remain the same, employees will now earn a leave for every 20 days of work instead of 45. Moreover, the new employees will be eligible to earn leaves after 180 days of employment instead of 240 days of work. 

Provident Fund Contributions

Another big change that is going to come under new labour law is the ratio of the take home salary and the employees and employer’s contribution in provident fund. As per the provision of the new codes, the basic salary of the employee will have to be 50 per cent of the gross salary of the employees. The PF contributions of the employee and employer will increase, the take home salary will decrease for some employees, especially those working in private firms.

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