New Labour Laws from July 1: Key changes in working hours, salary, PF, leaves

Labour laws 2022: The Central government's new labour laws are going to be implemented from July 1, 2022, in all probability. With this, there will be massive changes in all industries and sectors and how we are accustomed to working. From the regulations related to working hours of employees, provident fund to salary structures, all will undergo drastic changes.

However, there has been no official notification in this regard as of now. The new labour laws will have implications on wages, social security (pension, gratuity), labour welfare, health, safety and working conditions (including that of women). 

Read | New labour laws from July 1! How working hours, PF and in-hand salary will change

Reports suggest, so far 23 states including Uttarakhand, Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Odisha, Arunachal Pradesh, Haryana, Jharkhand, Punjab, Manipur, Bihar, Himachal Pradesh and UT of Jammu and Kashmir have framed rules under new labour laws.

These states have framed state labour codes and rules based on the new Code on Wages 2019, and the Industrial Relations Code 2020, the Code on Social Security 2020 and the Occupational Safety, Health and Working Conditions Code 2020, all of which have been passed by the Parliament. 

Key changes from from July 1, 2022

Working hours

The working hours for employees in all sectors will undergo a drastic change. Presently, the working hours are based on the Factories Act, 1948 at the national level for workers in factories and other such workplaces. While it is governed by the Shops and Establishment Acts of each state for office workers and other employees.

As per the new labour laws, the daily working hours have been capped at 12 hours while the weekly working hours have been fixed at 48 hours. This means that the companies/factories can make it a four-day-work week. Overtime has been increased from 50 hours to 125 hours in a quarter across industries.

Salary structure of employees

The new labour laws suggest that the basic salary of an employee will have to be at least 50% of the gross salary. As an effect, the employees will be making more contributions to their EPF accounts and gratuity deductions will also increase which will decrease take-home salaries of most employees.

Number of leaves

The quantum of leaves in a year will remain the same but employees will now earn a leave for every 20 days of work instead of 45, which is a good news. Moreover, the new employees will be eligible to earn leaves after 180 days of employment instead of 240 days of work as is applicable now. 

Provident Fund contributions

Another big change that is going to come under new labour law is the ratio of the take home salary and the employees and employer's contribution in Provident Fund. The basic salary of the employee will have to be 50% of the gross salary. The PF contributions of the employee and employer will increase, the take home salary will decrease, specially those working in private sectors.