New labour laws from July 1! Here’s how to negotiate for a higher salary amid inflation

The Central government plans to implement new labour codes on wages, social security, occupation safety, industrial relations, health and working conditions from July 1. If implemented, the new wage code will change your salary in many ways. These laws will affect your salary structure, PF contribution, working hours, and earned leave encashment, among other changes.

As of yet, only 23 states have pre-published the draft rules for these laws. Notably, the Centre finished the process of finalising the draft rules on these codes in February 2021.

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Here’s how the new wage codes will affect your salary after July 1

1. Reduced in-hand salary, increased PF and gratuity

The new wage code states a provision entailing that the employee’s basic salary should be at least 50 per cent of net monthly CTC. This implies a reduction in the in-hand salary and a hike in other components like PF and gratuity.

2. 12 hours work-week

The new labour laws may allow employees to have a four-day work week, provided they work for 12 hours on working days. As per the labour ministry, a 48-hour weekly work requirement is mandatory.

3. Modification in earned leave policy

If implemented, the new wage code will allow employees to cash up to 300 holidays on carrying forward. Notably, the leave eligibility has been reduced from 240 to 180 days of work in a year.

The new wage codes and inflation will significantly affect your career growth in many ways. Under such circumstances, it is crucial to know how to roll the dice when negotiating for higher pay in your current firm or to pitch for a better CTC in a new firm.

Here’s how to negotiate for a higher pay

Play tactfully and assess all points

Employees should not become happy by looking at a higher CTC in their offer letter. It is important to take a closer look at the take-home salary. The CTC is an employee’s total cost to the company. It is always best to pre-plan how to put forth your points about your eligibility for a higher raise at the time of negotiation. You should assess the value of the issues you will pitch and their sequence to make your argument more presentable and acceptable to the recruiter.

Check the PF component thoroughly

Certain firms put their monthly PF contribution in the employees’ CTC. This is an incorrect practice and will lead to a considerable plunge in your take-home salary if left ignored. While you check your CTC in the offer letter, it is important to ensure that the recruiter’s monthly contribution to PF isn’t mentioned.

Delay the salary discussion

Even if you are discussing your dream job, it is always best to delay the salary discussion. It would be best if you emphasised the additional values you will bring to the organisation and made room for the recruiter to mention the offer first.

If the recruiter doesn’t initiate the discussion, it is always best to pitch for a higher figure than what you actually want so that there is enough space to concede later.

Be open to walk out

Despite devising varied negotiation tactics, if your current or prospective employer remains inflexible to every point you put forth, you should be open to turning the offer down politely. There is always scope for better associations in future.