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Explained: New Wage Bill and How It Is Likely to Impact Your Salary Takeaway
The New-Wage Code Bill 2021, will have a direct impact on the central government employees' salary, provident fund and gratuity.
New Wage Code Bill: Finance Minister Nirmala Sitharaman had said that the Central government will be implementing the New-Wage Code Bill 2021 from April 1, 2021. Though the Code of Wages was passed in December 2019, the government had held back its implementation since it wanted to implement it together with other three codes – on Industrial Relations, Social Security and Occupational Health Safety & Working Conditions.
New-Wage Code and it’s impact on the employees and employers?
The New-Wage Code Bill 2021, will have a direct impact on the central government employees’ salary, provident fund and gratuity.
The wage code will lead to an increase in gratuity payments and employers’ contribution to their retirement corpus.
Many private companies prefer to keep the allowances component higher and the basic salary lower. This will not be allowed under the new rules.
As per the Wage Code Bill 2021, an employee’s monthly basic salary can’t be less than 50 per cent of the net CTC.
Private-sector employees’ salary will also be impacted. Most of those working in private companies are likely to see a cut in their take-home salary from April.
The labour codes would not only provide social security to the organised sector employees but also to informal sector workers.