Salary structure for employees set to change from April 1, those on high allowance could see their salary reduced | Personal finance news

New Delhi: Employees can expect a major change in their salary structures if the government notifies the new salary code. The rules are expected to come into effect from April 1.

Government notification on Salary Code 2019 may reduce net salary of employees.

Under the new rules, compensation would amount to a maximum of 50 per cent of total salary. This will result in mandatory changes in an employee’s salary structure.

Employees whose base salary is already 50% or more will not be affected. But those with a base salary below 50% will see a change in their take home pay.

In addition to this, there may be significant changes in the Provident Fund (PF) and gratuity.

Due to the increase in the basic salary, the share towards PF will also increase, since it is calculated on the basis of the basic salary.

The new rules will likely affect the salary structure of the highest paid employees with a high allowance component. The increase in FP and gratification could also increase the cost of businesses, as their contribution to them would increase proportionally.

There could also be a change in the working hours of employees. The maximum working time in offices could be increased to 12 hours.

Under the new law, 15 to 30 minutes of overtime would be considered overtime. Currently, less than 30 minutes of overtime is not considered overtime.

The new rules also state that employees should be given a half-hour break for every five hours of work.

Parliament has passed four codes out of four general codes on wages, industrial relations, social security and occupational safety, health and working conditions (OSH) which will eventually streamline 44 central labor laws.


William M. Mayer