New Delhi: In India, the take-home portion of private sector employee wages are likely to decrease as businesses will be forced to re-design pay packages from April 2021, after the GoI notified draft rules under the new wage rule, NDTV reported.

The latest regulations on salaries, which are part of the Code of Wages 2019, are likely to become applicable from April 2021 onwards. In compliance with the new regulations, the portion of the allowance cannot exceed 50 per cent of the gross wage or benefits, which indicates that the minimum salary must be 50 per cent.

In line with this, employers would have to increase the standard compensation part of compensation, resulting in a proportionate increase in gratuity benefits and the allocation of workers to the provident fund (PF). Retirement payments would likely entail lower employee take-home pay, but workers’ retirement pool would increase.

Several private corporations currently tend to put the non-allowance portion of the gross pay below 50% and the allowance portion higher. This will change, though as soon as the new pay guidelines come into effect. The regulations are likely to change the wages of private-sector workers because they normally get higher allowances.

According to the new rules, employers would have to increase the minimum wages of workers to fulfil the 50 per cent basic pay threshold.

 

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