7th Pay Commission: New Wage Code Bill w.e.f April 1

Several changes in take-home salaries will be witnessed if the new regulations are implemented

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Gratuity to be paid on termination of employment only after 5 years of service

The Centre is all set to implement the New-Wage Code Bill from April 1. 2021, which will alter the salaries of government employees drastically.

New hires at the entry level will get a minimum salary of Rs 18,000 per month. The minimum base wage will be at least 50 per cent of their net cost to company (CTC), which means that their monthly allowance will not be more than 50 per cent of their net CTC.

Come April, and most employees in the private sector will witness a dip in their take-home pay.

Dearness allowance (DA), house rent allowance (HRA), travel allowance (TA), and others will not exceed 50 per cent of net CTC. Of the 196 allowances that were prevalent, 51 have been excluded.

Twelver per cent of the minimum wage will go as contribution to provident fund (PF). Once the basic salary reaches 50 per cent of the CTC, the allocation to the PF will increase. Since an employees PF contribution is made up the basic salary plus DA, the implementation of the new wage code bill will increase the gratuity payments and will ensure that employees have a significant retirement fund.

Presently, gratuity is paid after five years of continuous employment with one company. However, once the new wage code bill comes into effect, employees will be able to get gratuity after one year of employment.

The rate of DA for central government staff was 17 per cent, which was hiked to 21 per cent.

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