4-day work week, change in PF contribution likely from July 1? Here's what we know

synopsis

The weekly work time dynamics in India will soon alter, as the national government plans to introduce new labour rules on July 1, 2022, which is next month. If the new labour rules go into effect, there will be a significant change in an employee's EPF payments, office working hours, and take-home pay. The government intends to implement these regulations as quickly as possible, and media sources indicate that they will go into force next month, despite no official confirmation.

Working hours and weekly off: Companies will be entitled to give staff three weeks off once the new regulation goes into force. This, however, will come at a cost. The new labour laws do not indicate that weekly working hours would be reduced. As a result, employees will most likely work 10 to 12 hours a day for four days, with weekly offs for the remaining three days, in accordance with the rules of the new labour laws. Furthermore, the new rules would increase the maximum hours of overtime for a quarter from 50 hours (under the Factories Act) to 125 hours across all industries.

PF contribution: Another significant shift that this will bring about is the ratio of take-home pay to employee and employer contributions to the provident fund. According to the new standards, the employee's basic wage must equal 50% of his or her gross salary. While this means that individual and employer PF payments will rise, take-home pay may fall for certain employees, particularly those in private enterprises.

Change in gratuity: The amount of money received after retirement, as well as the gratuity amount, will both increase under the latest draft guidelines. This is intended to help employees live a better life after retirement.

On August 8, 2019, the central government announced four labour codes: the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health, and Working Conditions Code, 2020. So far, 23 states have developed rules in accordance with these norms, which have been approved by Parliament.