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Firms in wait-and-watch mode on salary structure for hybrid work model

Firms in wait-and-watch mode on salary structure for hybrid work model

Companies had kicked off discussions around the need to change salary structures, however, experts say the hybrid work model hasn't sparked off actual revision in salary structures.

The long-delayed labour codes are also expected to be implemented in the upcoming year. The long-delayed labour codes are also expected to be implemented in the upcoming year.

With the looming formalisation of labour codes and a pending verdict on the relevance of the hybrid work model post pandemic, firms are in no hurry to tweak employee salary structures to reflect the remote-working arrangements.

Companies had kicked off discussions around the need to change salary structures as many people had relocated to smaller towns and hometowns away from office headquarters as remote work was expected to continue in some form in the hybrid work model. However, HR services firm Aon and prominent recruiter Randstad India said hybrid work hasn't sparked off actual revision in salary structures by companies.

Leading firms like Kotak Mahindra Bank, Axis Bank and Tata Consumer Products also confirmed that they are not changing their compensation structure because of hybrid work. Even though hybrid and remote work was touted as the future of work at the peak of the pandemic, employers veered more towards calling employees back to offices once the heath crisis began abating.

"We will have to see by March 2022 how much of the hybrid model is taking off. Maybe WFH (work from home) remains as an option, but most people come back to office. If the hybrid format does remain in some companies, it is unclear if they will really go to the effort of creating separate cost structures for the hybrid work employees," said Aon's partner for human capital business, Roopank Chaudhary.

Besides, the long-delayed labour codes are also expected to be implemented in the upcoming year.
 
"Companies are thinking about the labour code implementation and are waiting for it to be formalised. It will prescribe how companies calculate base salary and PF contribution for employees," said Randstad India MD and CEO PS Viswanath.

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Amid this, it is unlikely that companies will complicate their salary structures further, added Chaudhary.

The government has proposed four labour bills -- Wage Code, Industrial Safety and Welfare, Social Security and Industrial Relations -- to rationalise 44 central labour laws.

Some of its provisions include statutory floor-level minimum wage and provision of gratuity based on the new wage definition, which caps allowances at 50 per cent of the wages. The rules are expected to increase the cost burden for companies, which are emerging from a financially taxing year-and-a-half of pandemic.

The Labour Ministry has finalised the rules under the four codes. However, both the Centre and the states have to notify the rules under these codes to convert them into laws as labour is a concurrent subject. The states are in various stages of progression on the codes.

The experts, however, added that the pandemic has certainly led to more companies including health and wellness insurance as part of employee benefits. There is also more emphasis on variable pay, they said.

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