Good News! Employees’ take home salary won’t reduce this year, here’s why

While the second wave of COVID-19 has already created hue and cry in the country, the government is said to be not interested in implementing the labour reforms under the Code of Wages, 2019 anytime soon. It was already deferred as the implementation of the reforms was supposed to come into effect from April 1, 2021. 

As per a report by Economic Times, the pandemic has had a disastrous effect on many states and they have now slowed down on the framework for the implementation of the labour codes. Despite the repeated attempts by the Centre to convince the states to implement the draft rules, the states are taking their own sweet time due to the ongoing pandemic. 

This delay in the implementation will eventually be a boon for Indian corporates that were worried about the complex changes required in order to comply with the new codes. The delay means the corporates will have more time to realign employee salary structures as mandated under new rules.

The companies had before asked the Centre to relax the 50 percent mandatory cap on the allowance component of wages under the new rules as it will be a boon for them in terms of their financial health.

It can be further assumed that the rules are not likely to be implemented this year and maybe it will come next year which basically means that the employees take home salaries will not see a reduction.

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