The new labour laws which were to be implemented on 1st July 2022 for all the corporates and organizations under the registration of the ministry of corporate affairs have been postponed as of now due to multiple states not agreeing on the terms. The new labour law will shrink working hours, and PF as well as the in-hand salary of employees in the process.
There are rumours surging in the corridors of corporates as well in the labour ministry on the latest new labour laws 2022 which are now slated to be effective on a later date due to the non-agreement of certain states.
The latest labour laws would be reducing the take-home salary of the employees by increasing the HRA as well as the PF categories of the salary structure. Apart from that, new labour laws 2022 will also extend working hours to 12 hours a day as per the reports.
The labour ministry is ready with the rules for the 4 codes and mentions them when some states will be ready for the guidelines applied in their domain. Jammu & Kashmir has notified the rules, while Uttar Pradesh, Bihar, Uttarakhand, and Madhya Pradesh have placed draft laws for two codes and Karnataka has prepared rules for one code.
One of the biggest impacts of the new labour law will be on the take-home salaries, which is expected to reduce, owing to the fact that the government is eyeing increasing contributions towards provident fund (PF) and other post-retirement schemes. The new laws are expected to come into play soon, which will force employers to modify their employee compensations.
As per the Wages Codes 2019, wages that are paid to an employee include the basic pay plus dearness allowance (DA) and retention payment. Therefore, other remunerations such as PF contributions, bonuses, pension, HRA, gratuity, overtime, etc. are not covered under the definition of wages.
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Basic Pay to be 50 Percent of CTC
The new wages code makes it compulsory for organisations to make sure that 50 per cent of employees’ CTC is basic pay, while the remaining 50 per cent comprises other employee allowances, including house rent, overtime, etc.
If the company pays any additional exemptions or allowances that exceed 50 per cent of the CTC, the same will be treated as remuneration to be added to the wages.
Gratuity Cost of Companies to Increase
The new labour laws limit the maximum basic pay to 50 per cent of CTC, thus effectively increasing the Gratuity bonus to be paid to the employee.
Under the new wages code, the gratuity amount will be calculated on a larger salary base, which will include basic pay plus allowances such as a special allowance on wages. This is expected to increase the gratuity cost of companies.
While increasing the social security (pension) components of wages, the new laws are likely to decrease the take-home salary of employees.
15 Minutes Overtime Payment
There is also a rule incoming for any 15 minutes or more overtime will be attracting overtime payment to the employees.
48 Hours Set Work Time for One Week
The government has also made it clear that 48 hours is the maximum limit for a one-week work capacity and the employers are flexible to choose this work time and make it available in 4 days, 5 days, or 6-day week structure.
Four Broad Labour Codes on Wages
With the new law, the government is all set to subsume 44 central labour laws into four board labour codes, which are – code on wages, industrial relations; occupational safety, health and working conditions (OSH) and social security. The same has already received the President’s nod.
While the code on wages was passed in Parliament in 2019, the other three codes were approved by both the Houses last year. The Labour Ministry is now all set to implement the new rules under these four labour codes.
“We have finalised the rules under the four codes which are required to implement the four labour codes. We are ready to notify these rules. The states are doing their work to firm up rules under the four codes,” says Labour Secretary Apurva Chandra.
Pertaining to the new labour rules, companies will be required to make major changes in the employees’ salary structure. These include an increase in gratuity and the exclusion of benefits such as bonus, PF, and HRA from the wages.
To counter these latest changes, the Gen Payroll software is a segment-leading software that has incorporated all the labour laws for businesses. The changes such as salary structure, payroll/leave schedules, overtime payment features are there to make full support to the upcoming labour law 2021.
Highlights of Payroll Software
However, no big changes in PayRoll software due to the implementation of the new Labour Code. Users can easily set formulas as per their requirements or Company policy.
Payroll software is A Comprehensive & Powerful HR Tool for Calculation of Salary, PF, ESI, Professional Tax, Bonus, Arrears, Loans & Advances, TDS on Salary, Leave Management, Overtime etc. It is user friendly, flexible, single structure for all different slabs is helpful for the HR department and is very easy to use.
PF, ESI, & PT rate Master is given in the software so that users can easily change rates as per the companies requirements without waiting for updation of the software.
In-Built TDS and Income Tax calculation facilities are given. TRACES Utility is given for the generation of form 16 which is helpful for Filing the Income Tax return. E-filing facility of TDS (Form 24Q) is given, generation of challan of PF ESI by Gen PayRoll software.
PayRoll: Clever Yet Professional Solutions
- Computation of salary/ wages
- Calculation of Overtime/Arrear
- Reverse salary calculation
- Provident fund
- Employee state insurance
- Gratuity
- Bonus
- Labour welfare fund
- Tax deduction at source/Income Tax returns
- Professional Tax
- Compliance of Statutory forms: PF, ESI, Wages, Pension etc.
- Online Payroll Portal
- Bulk E-mail facility and Bulk SMS facility
- Document Manager
- User-defined formulas and Templates
- Different level setups
- Advances and reimbursement calculation
- Cheque printing
- Bulk Export/Import of various information
- Different reports in Excel/Word are available
- Login rights to multiple users with user-defined rights
- Daily/Weekly backups
Brief Description of the Above Mentioned Points
1. SALARY COMPUTATION:
- User-defined, dynamic formula based Salary Structure
- Monthly Salary Lock Facility
- Bonus, Reimbursement Facility
2. OVERTIME/ARREAR:
- Auto Overtime Calculation
- Arrear Calculation
- Arrear Slips and Register
3. PF & ESI Returns:
- PF Online ECR, KYC Submission
- Form 5, 10, 12-A, 3A, 6A
- ESI Online Employee Registration
- Online ESI Challan
- Form 5, 6, 7
4. PROFESSIONAL TAX:
- State-wise Auto Professional Tax
- Monthly/Quarterly/Annual Returns
- Professional Tax Challan
5. TDS & ITR:
- Auto Income Tax Calculation as per IT Rule
- TDS Challan, Form 24Q, Form 27A Quarter Return
- SARAL II (ITR-1) & ITR-2
- Form 16/ 16AA/ 12BA
6. ONLINE PAYROLL PORTAL:
- Online access for Salary, Attendance, and Personal Info
- Online submission of Investment & Leave Application
- Download Payslips, Form 16, Computation, etc
7. Bulk SMS & E-Mail:
- Payslips and Customized Templates to Employees
- Common Templates to Employees
- Common Templates to Others
8. Gratuity and Bonus:
- Gratuity and Bonus Calculation
- Gratuity Forms A to M
- Bonus Forms A,B,C,D
10. Import/Export:
- Employee Master
- Attendance Sheet
- Salary, Arrear, Reimbursement, Overtime
- Different Types of Investments
Gen payroll makes compliance with all these ever-changing rules hassle-free for corporate houses. The Gen Payroll software is developed by SAG Infotech and you can try it for free for a limited period.
