7th Pay Commission: In-hand Salary May Come Down, PF to Increase From April 1

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posted on 3 years ago — updated on 1 second ago

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After the implementation of the new wage code, the salary of the government employees is also likely to rise.

Prime Minister Narendra Modi led central government is likely to implement the New Wage Code Bill 2021 or new labour law from April 1, 2021. The changes which the Central Government employees witness can include changes in official working hours, gratuity and provident fund (PF). After the implementation of the new wage code, the salary of the government employees is also likely to rise.

As everyone is waiting for the announcement of an increase in Dearness Allowance (DA) if this law comes into effect employees will have a mixed experience as there will be both advantages and disadvantages. According to reports, contribution to provident fund is expected to rise while in-hand salary is said to come down.

Also, the new wage code proposed by the government has the provision to have the basic salary of the employees at 50 per cent of one's net monthly Cost to Company (CTC) and hence the changes would affect the basic pay structure of an employee as the figures for PF, Gratuity, Dearness Allowance, Travel Allowance and House Rent Allowance will change.

In-hand salary to come down After the law will come into force it is said that the take-home salary of an employee may decrease as if the basic salary is up to 50 percent then 24 (12+12) percent of its share will be transferred to the employee's PF account. This also means that the PF contribution will increase. Currently, most of the companies deduct 12 percent of PF from the CTC of the employees.

Change in gratuity rules According to the new law, employees will be entitled to gratuity even if they have been employed for just one year. However, currently, employees are getting gratuity after five years of continuous work in the same company.If the new wage code gets implemented, then it will be for the first time after independence that any changes have been made in the labour laws. However, no official announcement has been made yet if the wage code will be implemented from April 1, 2021, or not.

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