Maharashtra State Government has published draft code on social security rules, 2021 on 27/8/2021 pertaining to maternity, gratuity and cess in relation to building and other construction workers and other rules for subsumed acts are yet to be released.
Maharashtra State Government has also published draft code on wages rules, 2021 on 3/9/2021 pertaining to minimum wages, payment of wages, and other rules for subsumed acts under this code, are yet to be announced.
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, the labour laws 2021 will also extend working hours and as mentioned above, as far as Maharashtra State is concerned, the draft hours of work has been published recently as follows :
Hours of work.—
(1) No employee shall be required or allowed to work in an establishment for more than forty-eight hours in a week.
(2) If an employee works on daily basis in an establishment, the period of work of such employee, inclusive of his interval for rest, shall be so arranged that shall not spread over for more than ten and half hours per day.
(3) If the employee works in the establishment for six days in a week, the period of work of an employee, inclusive of his interval for rest, shall be so arranged that it shall not spread over for more than ten and half hours per day and the seventh day of the said week for the employee shall be a paid holiday.
(4) If the employee works in the establishment for less than six days in a week arising due to provision of flexibility in working hours, the period of work of an employee, inclusive of his interval for rest, shall be so arranged that it shall not spread over for more than twelve hours per day and the remaining days of the said week for the employee shall be paid holidays: Provided that, the flexibility in working hours shall be permitted with the consent of negotiating union or negotiating council or with the consent of majority of employees in the absence of negotiating union or negotiating council.
(5) No employee shall be allowed to work for more than five hours continuously before he has had an interval for rest of at least half an hour
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 (EPF) and other post-retirement schemes. However, some States have announced their respective rules, many other States are working on the same and will have to wait until the announcement is made which perhaps will then compel the employers to modify their employee compensation as per the effective date.
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.
Basic Pay to be 50 Percent of CTC
The new wages code makes it compulsory for organizations 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 amount 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
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.
Karma Management Global Tech makes provision for changing the payroll system.
To cope up with the changes happening on the labour law scenario front, Karma Management’s payroll processing business vertical has been put in place , for meeting all the changes required to be adhered to, under the new labour codes. The changes such as salary structure, payroll/leave schedules, overtime payment features are constantly under running trials in order to give full assistance to the new settings under the labour codes.
Highlights of Karma Management Payroll Processing System :
Karma Management’s payroll system with AI chat bot sits in one of the multiple platforms which is inter-linked to a common front ending display platform where the AI chat bot is fully functional to receive instantly all queries and to answer them immediately instead of cascading down to several pages to get a single answer or engage in a transaction.
This Comprehensive & Powerful HR Tool is designed and developed in such an efficient manner for Calculation of Salary, PF, ESI, Professional Tax, Bonus, Arrears, Loans & Advances, TDS on Salary, Leave Management, Overtime etc. It is customer centric , user friendly, flexible, and client focused to meet and adapt to all kinds of transactions.
Statutory payroll compliances like PF, ESI, PT and LWF have in built parameters which can be changed instantly to meet the requirements of each and every client, totally customized for every requirement , resulting in instant solutions.
TDS and Income Tax calculation facilities are all in built and adaptable to any changes and requirements. . TRACES Utility is given for the generation of form 16 for filing the Income Tax return. E-filing facility of TDS (Form 24Q) is also provided.
· 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
· User-defined formulas and Templates
· Different rights and access
· 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