From July 1, will we have a four-day work week and more vacation? Here are the details

With the new labour laws coming into effect on July 1, 2022, the weekly work time dynamics in India may soon change.

There will be a large shift in an employee’s EPF contributions, office working hours, and take home pay if the new labour laws are adopted. It has been working on the design of four new labour codes, under which there will be significant changes to an employee’s salary, his or her contributions to PF, as well as work hours. The government wants to implement these laws as soon as possible, and media reports suggest that they will come into effect from next month even though there has been no official intimation yet.

New Labour Laws to be Implemented Soon — What’s Going to Change?

It has been mentioned earlier that if the new labour laws are implemented, it will bring about significant changed related to an employee’s office working hours, his or her EPF contributions and the take home salary.

In the new rule, employees will be able to get three weeks off once it becomes effective. It will, however, cost them. The new labour codes do not suggest a reduction in weekly work hours. Consequently, workers will likely work 10 to 12 hours a day for four days, then receive weekly offs for the remaining three days under the new labour laws. In addition to this, the new laws will increase the maximum number of hours of overtime from 50 hours (under the Factories Act) to 125 hours, across all sectors, for a quarter.

It is also going to change the ratio of take-home salary to employee and employer contributions to provident funds. New codes require that the employee’s basic salary be at least 50 percent of his or her gross salary. Although both the employee and employer will be contributing more to PF, some employees, especially those working in private firms, will see their take home pay decrease.

The money received after retirement as well as the gratuity amount will also increase under the provisions of the new draft rules. This aims at enabling employees to lead a better life after retirement.

The central government intends to rationalize the types of leave that employees can take during their employment with a company under the new labour laws. Likewise, the policy of carrying forward a leave to the succeeding year and encashment of leaves will be rationalised. As part of the draft model for services, the government has incorporated the work from home structure, which has become commonplace during Covid-19.

On August 8, 2019, the central government notified the Code on Wages, 2019. The Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health, and Working Conditions Code, 2020 will be notified on September 29, 2020. So far, 23 states have framed rules under these codes, which have been passed by the Parliament.