Labour Code: Here’s what will change in your take home salary, PF, DA amount, pay structure and more

As per the new wages code, allowances are capped at 50 percent which basically means that half of the gross pay of an employee will be basic wages. The PF contribution is calculated as a percentage of the basic wage, which includes basic pay and dearness allowance (DA).

The government is said to be implementing the four labour codes in the coming months and that would eventually mean the take-home salary of the employees will go down. However, the Provident Fund (PF) will increase. The four labour codes are likely to see the light of day in a couple of months as the central government is now keen to go ahead with the implementation of these laws. The implementation of these labour codes will result in the reduction in take-home pay of employees and higher provident fund liability of companies. The labour ministry had envisaged implementing the four codes on industrial relations, wages, social security and occupational health safety & working conditions from April 1, 2021. These four labour codes will rationalise 44 central labour laws.