This is Why Your In-hand Salary Will Reduce from April 2021
Recently, companies implemented pay-cuts during the coronavirus lockdown period, reducing the in-hand salary of employees. Now, the take-home salaries of employees are going to come down from April 2021 in view of the new wage rules, which require companies to restructure pay packages of their staff. What usually happens is, employers keep the non-allowance part of the salary below 50 per cent, resulting in high in-hand pay for employees. The draft rules of the Code of Wages 2019 state that “wages for the purpose of calculation of gratuity and provident fund contributions will have to be at least 50 percent of employees’ total pay or compensation.” In order to balance out the increased contribution towards PF and gratuity, companies are expected to introduce a proportional cut in the allowance component. The new wage rules subsume four labour laws – Minimum Wages Act, Payment of Wages Act, Payment of Bonus Act and Equal Remuneration Act.
Why New Wage Code May Result in Lower Take Home Salary for Employees Next Year
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