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Impact of Upcoming Labour Law 2021 Rules on Payroll Software

Changes Labour Law rules 2021

The central government is expected to make some major changes in the rules of labour Laws, and these changes will come into force from April 1, 2021, with the start of the new financial year. These new rules will make changes in current rules regarding overtime, salary structure, and working hours. The Central Government has made a lot of changes in the rules of labour law, which will come into action from October 1. These changes are related to working hours and in-hand.

Changes in Salary Structure

According to it, now the basic pay will be 50% or above of the total salary. With this change, the salary structure will be also changed because a non-perks portion of the employee’s salary will now go down below 50% of the total salary. Additionally, the portion of allowances will be also changed (increase) in the total salary. As the basic pay will increase PF will be also increased, thus now there will be a cut in the take-home or hand-to-hand pay.

This will increase the contribution to gratuity and PF which will result in a higher amount after retirement. So with this draft companies will have to contribute more to the PF for the employees, which means the cost to the company will also increase

Three Days leave a Week

The amendments also state that if an employee works for 48 hours in 4 days, he is eligible to take leave for 3 days a week. But as you can easily observe that the employees have to increase their working hours accordingly.

According to the current rule, working is 8 hours, thus employees used to work 8 hours a day but to get the benefits of the new rule employees will have to work 12 hours a day. 

Even 15 minutes will be Considered OT

Under the current rule, The draft rules prohibit any employee from working for more than five consecutive hours and also include instructions to give half an hour’s rest to the employees after every five hours.

According to the current rule, less than 30 minutes is not being considered under overtime, but the new draft rules of the OSCH Code provide for additional work between 15 and 30 minutes that will be considered as 30 minutes overtime. The new draft rule also proposes to increase the maximum working hours to 12.

Additionally, it also prohibits any employee from working for more than five consecutive hours and also includes instructions to give half an hour’s rest to the employees after every five hours.

Due to all these changes in the labour Rules, Some necessary changes will also take place in Payroll Software. As per a recent update, Gen Payroll, a payroll software by SAG Infotech gets compliant and now it will assist accordingly with all the new rules, guidelines, and changes. Thus, Business houses and companies don’t have to worry much, Gen Payroll software works on new labour law 2021 changes accordingly.

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