New labor laws may change working hours, Pf and wage structure; Details here

The Center is seeking to implement a series of labor reforms from July 1. The new rules, if implemented, will bring sweeping and drastic changes to all industries and sectors in India. More importantly, under the new regulations, employee working hours, employee provident fund contributions, and salary structures will undergo massive changes.

Although reports indicate that the government is seeking to implement these rules as soon as possible, no official notification has yet been released. Reforms cover areas such as wages, social security (pension, gratuity), worker welfare, health, safety and working conditions (including those of women), where regulations in India had stagnated in the face of accelerating global business progress.

So far, 23 states have developed labor codes and rules based on the new Wages Code, 2019, and the Industrial Relations Code, 2020, the Social Security Code, 2020, and the Security Code , Health and Working Conditions, 2020, all of which were passed by Parliament.

Business hours

One of the most talked about changes the new rules would bring is to employee working hours. Currently, hours of work are governed by the National Factories Act of 1948 for workers in factories and other similar workplaces, and by each state’s Shops and Establishments Acts for office workers and other employees. Under the new rules, daily and weekly working hours have been capped at 12 and 48 hours. This will allow companies to introduce 4-day working weeks, while overtime hours have been reduced from 50 hours to 125 hours in one quarter across all sectors.

Salary structure

According to the new codes, an employee’s base salary must be at least 50% of an employee’s gross salary. As a result, employees will make larger contributions to their EPF accounts and gratuity deductions will also increase, reducing take-home pay for most employees. However, the benefits they will receive after retirement will increase.


The government has also streamlined leave schemes under new labor codes. While the number of days off in a year remains the same, employees will now earn time off for 20 days of work instead of 45. New employees will also be able to earn time off after 180 days of employment instead of 240 days of work .

(Edited by : Sudarsanan Mani)

William M. Mayer