Your Take-Home Salary To Not Change From April 1; Govt Puts New Wage Code On Hold

In a breather to lakhs of employees and thousands of employers, the new wage code, which was expected to modify most workers' current compensation systems, has been delayed and won't be implemented from April 1, as planned.

According to government sources, the wage code, along with the other three — social security code, workplace relations code, and occupational safety, health, and working conditions code — will not be enforced on April 1.

Companies will have more time to rework employee benefits processes as a result of the delay. According to salary expert Aon, most employers are still waiting for clarification on several new wage code points, including the components to be included or excluded in basic pay.

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The new pay regime will affect most of India Inc.'s salary systems after the government announces it.

The Wages Code, which was passed by Parliament last year, contains these new laws. Indian companies/employers/workers will see improvements in such compensation components as take-home wages, provident fund, and gratuity, payslips, and so on once they are enforced. As a result, India Inc's balance sheets will be affected.

The Wage Code covers both government and private-sector workers.

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Allowances will be capped at 50% of gross wages under the current salary concept. In the private sector, the basic pay portion must account for 50% or more of a worker's overall salary. This basic salary will consist of basic pay plus DA, which must equal 50% or more for government employees.

According to staffing agencies and HR practitioners, most wage systems in the country will adjust due to the new salary regime. The basic pay portion is currently drastically lower than 50% for the vast majority of employees.

Allowances will be capped at 50% of gross compensation under the new definition of wages. In the private sector, the basic pay portion must account for 50% or more of a worker's overall salary. This basic salary will consist of basic pay plus DA, which must total 50% or more for government employees.