New Delhi. Ever since the government has implemented the new labor law, its merits and shortcomings are being continuously discussed. In this, one thing is being discussed the most, about which people are also scared, whether the in-hand salary of the people will reduce after the implementation of the new labor law. Till now all the experts and organizations were speculating on this in their own way, now the government has cleared the whole situation and told whether you should worry about salary or not.
After the implementation of the new Labor Code, fear was being spread among the employees on social media that the take home salary would be reduced. The claim behind this is regarding the new rules of PF. It is being said that if basic salary increases, PF will also be deducted accordingly and take home salary will reduce. There is a provision to change the salary structure in the new labor code. Due to this change, it is being said that the salary coming in hand will reduce.
Labor Ministry itself replied
Putting an end to all these speculations on social media, the Labor Ministry itself has told what effect the new rule will have on take home salary. The Labor Ministry has made it clear that nothing like this will happen even after the implementation of the new law. However, the ministry also said that as long as the PF calculation continues to be at the limit of Rs 15,000, there will be no impact on your take home salary.
Why is confusion increasing among employees?
A rule has been made in the new Labor Code that henceforth the entire amount of employee’s salary will be calculated by including basic, dearness allowance and other allowances and then 50 percent of it will be considered as basic. Till now many companies keep the share of basic very low. By giving small basic to the employees, they put all the money in allowance, so that their liability on PF gets reduced. This is the reason why the government has talked about changes in the salary structure.
What does the new rule say?
There is a provision in the new Labor Code that if more than 50 percent of the total salary is being given to an employee as allowance, then it will be necessary to add this excess portion to his basic salary. Obviously this can increase the basic salary and this rule is creating confusion among the employees. They feel that if the basic salary increases then their PF will also be deducted more and the take home salary will reduce.
The government told the complete calculation
The Labor Ministry has stated in clear words that even after the new Labor Code, the take home salary of the employees will not be reduced, because at present PF is calculated only at the fixed limit of Rs 15,000. This means that whether your basic salary is Rs 20 thousand or Rs 30 thousand, the PF deduction will be only Rs 15 thousand. This is an old rule of EPF and it is important for both the employee and the company to follow it. If more grant is to be made in PF then the employee will have to invest through Voluntary Provident Fund i.e. VPF.
Clear confusion about salary of Rs 80 thousand
If someone’s total salary is Rs 80 thousand and the basic part in it is Rs 30 thousand and allowance is Rs 50 thousand, then in the new labor code the allowance cannot be more than 50 percent of the total salary. Therefore, out of the allowance of Rs 50 thousand, Rs 10 thousand will be put in the basic and it will become Rs 40 thousand, while the allowance will also reduce to Rs 40 thousand only. However, if PF is calculated only at Rs 15 thousand, then 12 percent of it i.e. Rs 1,800 will be deducted from the employee’s salary and the company will also invest the same amount. It is obvious that the same amount of money was deducted earlier also and the same amount of money will be deducted even after the new Labor Code.
