What will change under India’s New Labour Code from July 1, 2022?

As working individuals, you all love Friday evenings and hate Monday mornings. A five-day working week and a two-day weekend have become your reality. But now, no more, because the New Labour Code came into effect on July 01, 2022.

Since the National Democratic Alliance (NDA) came to power, it has been making several reforms in different sectors. Prime Minister of India, Narendra Modi, mentioned bringing in labour reforms in the country earlier in his speeches.

The New Labour Code’s introduction aims to improve labour conditions. Under this code, reforms have been made to working hours, salary and wages, leaves, and account settlement after resignation.

Let’s have a look at the details of the New Labour Code, 2022:

After getting passed in the lower house and upper house of the parliament and receiving the president of India’s consent, the Government of India has released the New Labor Codes, which contains four different codes:

  • The Wage Code
  • The Social Security Code
  • The Occupational Safety, Health, and Working Conditions Code, 2020
  • The Industrial Relations Code

As per the government, these reforms will be beneficial for everyone, and they will benefit the workers in the organized and the unorganized sector. Although labour reforms have taken place earlier, the recent reforms will provide more benefits. Moreover, they will consolidate the existing 29 central labour regulations.

According to the New Labor Code, the definition of a worker is not just limited to the blue-collar jobs, i.e., the employees in a factory, workers working in tech companies will also be considered under these reforms.

Following reforms will take place after the implementation of the New Labor Code

  • Full and Final Settlement in two days

The employing organization must settle all the dues of an employee resigning from its post, being dismissed, or retiring within two working days. These dues will include not just the salary but leave encashments, reimbursements, etc. Earlier, this period was between 45 to 60 working days.

  • Less Working Days, More Working Hours

After its implementation, an organization can ask its employees to work for 12 hours a day rather than 8 hours per day. But doing so will reduce the number of working to 4. TH total number of hours an individual needs to work in a week remains unchanged, i.e., 48 hours.

  • New rules for leaves

Reduction in the working days leads to an increase in weekly offs. If employees are working four days a week for 12 hours per day, then they will have three weeks off. All the employees will be allowed to take extended leaves after 180 working days, which was 240 days earlier.

  • Female employees’ safety

Female workers cannot be placed in night shifts without consent. If they are placed in Night Shifts, their safety and security must be ensured beforehand. 

  • More Basic Salary but Less cash-in-hand

While the employees’ basic salary will be increased, they will receive less cash in hand, changing their salary structure. The Provident Fund of an employee is deducted from their basic salary. The increase in their basic pay will also increase the amount deducted for their Provident Fund.