A lot of reports are doing the rounds that your salary structure may change from April 1, affecting your take-home pay and retirement benefits. While such a change is under discussion and was supposed to get implemented from the financial year 2021-22, the final notification from the government is yet to make way.
Notably, the government has introduced four labour codes - Code on Wages, Code on Industrial Relations, Code on Social Security and Code on Occupational Safety, Health & Working Conditions -- in order to simplify and bring transparency in the labour legislations. These four Codes will consolidate 29 existing legislations.
While the four Codes have been passed by the Parliament and approved by the President, the rules are yet to be notified. Unless these Codes come into effect, no change in the salary structure is expected.
"The four Bills have become an Act after the President's approval, but the effective date for the Act to come into force has not been notified yet. The central government shared the rules for public comments around three months ago, but they have not yet notified the rules. The state level rules have not been announced too. Only five or six states have done it so far," says Sudhakar Sethuraman, Partner, Deloitte India.
EXPECT CHANGES FROM JUNE
Sethuraman says while there has been no formal announcement of the timeframe, it may be expected from June or July this year. "The government has been quite vocal and clear about the fact that they will implement the labour laws soon.In fact, during her budget speech, Finance Minister Nirmala Sitharaman made a reference about labour codes. I presume, the notification will come by June 1 or July 1 after state elections are done."
WHAT ARE THE KEY CHANGES?
The changes linked to the salary are what should concern you the most. As of now, 20-40 per cent of your CTC forms the basic salary. Once the Codes are implemented, your basic salary will form 50 per cent of your CTC. In no case will aggregate allowances (HRA, travel, conveyance and special allowances, etc) be higher than the basic salary. Any excess amount will be submerged in the basic pay.
If your basic pay goes up, all salary components linked to your basic pay such as EPF and NPS contribution and gratuity will be revised upwards. If higher contribution will go into EPF and gratuity, your take-home pay will go down.