New labour laws from July. How working hours, annual leave will change?

From July 1, 2022, the central government intends to implement new labour laws. If this is implemented, office working hours, employee provident fund (EPF) contributions, and in-hand salary will all change significantly. While office hours and PF contributions are expected to rise, in-hand pay is expected to fall.

The government is working to quickly implement a set of four new labour codes. The government believes that the new labour laws will increase investment and employment opportunities in the country.

Read | New Labour Code: Salary, PF, gratuity, and working hours may change as of October 1 - Find out more here.

Wages, social security (pension, gratuity), labour welfare, health, safety, and working conditions are all addressed in the newly enacted Labour Codes (including that of women).

What will happen if a new labour law is enacted?

1. 1. If the new labour laws are implemented, businesses will be able to significantly alter office working hours. They have the option of increasing office working hours from 8 to 12 hours. However, they will be required to compensate their employees by providing three weekly vacation days.
   The goal is to keep the total number of working hours in a week constant.
     
2. In addition, the maximum number of overtime hours for workers has been increased across industries from 50 hours (under the Factories Act) to 125 hours (under the new labour codes) in a quarter.
      
3. The take-home salary component and the employer's contribution to the provident fund will both change significantly. The employee's basic salary could be reduced to 50% of the gross salary under the new codes. It will raise both the employee's and the employer's PF contributions. Some employees, particularly those in the private sector, will see their take-home pay decrease.
      
4. The amount of money received after retirement, as well as the gratuity, will increase. Employees will be able to live a better life after retirement as a result of this.
      
5. The government also wants to simplify how much leave a worker can take during his or her employment, as well as how much leave can be carried over to the next year and how much leave can be encashed while on the job. The new Labour Codes have reduced the number of days required to be eligible for leave from 240 to 180 per year.
   However, the amount of paid time off will remain the same, with one day of paid time off for every 20 days worked. Similarly, no changes have been proposed to the 30-day limit on carrying forward leaves.
       
6. The central government has recognised Work From Home (WFH), which is a common market practice across sectors, particularly since the outbreak of the covid-19 pandemic, in the draught model standing order applicable to the service industry.
     
7. According to reports, 23 states have enacted labour laws. The remaining seven have yet to do so. The legislature passed these codes.