The new labour code regulations are expected to bring about changes in the way millions of employees in India work and are compensated. Notably, employees may find themselves working a four-day week under the new rules, as employers now have the flexibility to implement a model where staff can work up to 12 hours per day, provided the total hours do not exceed 48 each week.

This shift in work hours aims to enhance work-life balance for employees by allowing them to have three consecutive days off. Firms may opt for this model to attract and retain talent while maximising productivity.

In conjunction with these changes, the basic salary requirement has been updated. Under the new regulations, at least 50% of an employee’s total cost-to-company (CTC) must now be attributed to basic salary. While this change could increase earnings towards retirement savings such as the Provident Fund (PF), it may also result in lower immediate take-home pay for certain workers.

Revised Contributions and Gratuity Rules

The amendments to the Provident Fund structure mean that higher basic salaries will subsequently raise both employee and employer contributions to the PF. This enhancement in retirement savings is designed to benefit employees in the long run, despite potentially decreasing monthly incomes in the short term.

The new labour code also specifies updated gratuity provisions. Fixed-term employees will now qualify for gratuity benefits after just one year of service, while the existing five-year requirement for regular employees remains unchanged. This is expected to provide better financial security for workers with temporary employment contracts.

Additions to salary payment rules mandate that employers must ensure minimum wage compliance and equal remuneration for men and women performing similar roles. Daily wage workers will need to receive payment on the same day they work, with weekly and monthly employees receiving payment according to specified timelines.

Regulations on Workplace Safety and Employee Rights

In the event of layoffs, particularly affecting groups of 50 to 299 employees, firms must notify the government and provide preliminary notice. Those affected will receive 50% of their wages and a one-month notice period, emphasising the intention to safeguard workers during employment transitions.

For larger layoffs involving over 300 workers, companies must seek government approval and adhere to a three-month notice requirement. This appears to be an effort to maintain job security amid potential restructuring in various sectors.

Health, Safety, and Special Provisions

With the introduction of new regulations, workplace safety has been officially designated as the responsibility of employers. In efforts to enhance health standards, companies will be required to create safety committees and provide free annual health check-ups for their employees.

Industry-specific rules also apply, especially to the construction sector and mines, which must appoint safety officers and establish canteens for workers where applicable. These initiatives underscore the commitment to improving the working environment across various sectors.

Furthermore, women’s participation in the workforce has been addressed, allowing them to work in all sectors. However, if they are employed during night hours, appropriate safety measures must be in place to ensure their protection. Special measures will also be implemented for pregnant women in potentially hazardous roles.

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