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How Will Change in Compensation And Benefits Impact Employees In 2021?

The government has also proposed that salary deduction in the form of recovery of housing rent, loans, or fines due to absence from duty, can’t exceed 50% of wages. This is a great step towards preventing employees from exploitation. It will serve as a warning signal for companies who are always keen to deduct employees’ salaries, mainly for unnecessary reasons.

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It is for the first time in the country’s 73-year history that we are going to witness transformation in labor law, which will certainly be beneficial for both workers and employers. This is set to happen through the consolidation of four laws associated with wages and bonuses: Payment of Wages Act, 1936, Minimum Wages Act, 1948, Payment of Bonus Act, 1965, and Equal Remuneration Act, 1976.

Minimum wages to all types of workers

To begin with, the initiative will ensure that all kinds of workers in India will be entitled to get minimum wages. Workers hailing from both organized and unorganized sectors will be covered by Employee State Insurance (ESI). The new guidelines also talk about increasing the contribution to gratuity and PF, which will enable workers to live a pleasant life after retirement as they will have sufficient money as a backup to meet their daily expenses.

No exploitation

The government has also proposed that salary deduction in the form of recovery of housing rent, loans, or fines due to absence from duty, can’t exceed 50% of wages. This is a great step towards preventing employees from exploitation. It will serve as a warning signal for companies who are always keen to deduct employees’ salaries, mainly for unnecessary reasons.

Flexibility and compensation

Besides this, the government is looking at transiting to a 4-day-week work culture by fixing total working hours at 48 hours a week. This move will ensure enhanced flexibility to employees by giving them 3 options: work 4 days a week (12 hours per day), 5 days a week (9.5 hours a day), or 6 days a week (8 hours per day). Also, in the case of overtime, employees would get compensation of at least twice their regular pay.

Women empowerment

The guidelines are also likely to enable women to work in all kinds of trade, and also allows them to take night shifts if they wish to. It’s not that women in India are only present in specific domains. In fact, they are present everywhere. The idea of this proposal is to eliminate the perception that women can only participate or perform well in limited fields, and encourage them to take charge in other fields, and excel there, too.

Non-discrimination

The new labor laws will make sure that nobody is discriminated against on the ground of gender during the hiring process. There are times when employers prefer a male candidate over a female candidate and vice versa, without analyzing who is more talented and deserving for the profile. However, the government won’t allow this anymore. Doing so will encourage healthy competition among youth, and ensure that the job is only offered to a worthy candidate.

Through these revisions, the government is also looking at making minute changes that can create a major impact. For instance, employees who join an organization during the month will receive salary by the 7th of the succeeding month instead of waiting until the next pay cycle. Similarly, those who are leaving would receive a salary within two working days from the date of resignation. Usually, companies take a lot of time, sometimes even months, to process the salaries of those who have resigned, eventually leading to an unhappy ending for employees. Companies should understand that such behavior is damage to their reputation.

The Way Forward

Although the new transitions are scheduled to go live from April 1, 2021, it is essential for both employers and employees to understand them well, in order to avoid confusion and miscommunications. Various points still call for clarity, however, as an overall review, the new wage rules look quite optimistic and are likely to bring betterment to both employers and employees in the long term.

(The given article includes the inputs from Meenakshi Jadhav, HR Head, TCL India)



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