New Labor Code India: The new labor code has been issued by the central government. This will impact millions of workers. The new labor law will impact their salary structure, gratuity, provident fund contributions, ESI benefits, and many other aspects. The new labor code also includes specific provisions. These include minimum wages, gratuity for fixed-term employees after one year of service, salary and night shift rules for women, and benefits for gig workers. Let’s explore the changes in the new labor code in detail.
Definition of Salary in the New Labor Code
According to the new rules, most of an employee’s salary is now included in the calculation of salary. However, some allowances are excluded from salary. This does not include house rent allowance, conveyance allowance, travel concession, bonuses granted under any law, commissions, or amounts received to cover specific job-related expenses. It has also been stipulated that the total amount of allowances cannot exceed 50 percent of the salary. If the allowance exceeds this limit, the excess amount will be added to the salary.
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Social Security System for Gig Workers
The new Labor Code also brings gig and platform workers under the ambit of social security. Under this, companies will be required to contribute one to two percent of their annual turnover to a social security fund. This fund will be used to provide insurance, health care, and other essential benefits to gig workers. This will provide significant relief to millions of people working in the unorganized sector.
Changes in Provident Fund Rules
The scope of Provident Fund rules has also been expanded under the new Labor Code. Now, it will be mandatory for institutions or workplaces employing 20 or more employees to provide PF benefits. Previously, this rule was limited to select notified areas. This change will benefit employees who previously lacked access to PF benefits.
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Gratuity Rules Simplified
The rules related to gratuity have also been changed for the benefit of employees. According to the new Labor Code, completing five years of service is no longer required to receive gratuity. Instead, completing just one year of service will entitle employees to receive gratuity benefits. This will provide financial security to employees in the event of leaving or changing jobs, and they will also receive other related benefits.