A lot of changes enhance the employees and employers as four new labour laws are awaiting implementation. Some of the important changes/areas of impact will be, Lower take-home pay, higher contribution to the Employees Provident Fund (EPF) account, calculation of the number of paid leaves available in a calendar year and the maximum working hours in a week.
One of the labour laws, the Occupational Safety, Health and Working Conditions Code (OSH code) said that an employee cannot accumulate more than 30 days of paid leave in a calendar year.
If the accumulate paid leave due to an employee exceeds 30 days in a calendar year, the company (employer) will have to pay for the excess leave.
In this case, ’employee’ means those workers who are not in managerial or supervisory positions.
It is important to note that the Occupational Safety, Health and Working Conditions Code, the Code on Wages, Industrial Relations Code and the Social Security Code are awaiting a government notification for the date from when these new laws will be effective, as per reports.
The new four labour laws have pass by the parliament and notified by the government.
They are only awaiting an effective date from which laws will come into effect.
As per the report, experts say the new rule will do away with the system of unuse leave getting lapse beyond a certain limit.
To avoid paying an employee/worker for unuse ‘paid leaves’ exceeding 30 days in a year, employers may ask workers to go on vacation means utilise the excess ‘paid leave’.
When the government implements the OSH code, encashment of leave in excess of the define limit will become mandatory.
But how much an employee will be paid?
Will the leave encashment be done on the basis of per-day basic salary or will other allowances such as special allowance, house rent allowance also be taken into account?
Under the OSH Code, the amount of leave encashment will have to be calculate with reference to wages as define under the Code on Wages.
As per the definition, the term wages includes all remuneration payable as per the terms of employment in respect of work done in such employment, except certain components which are specifically exclude (such as house rent allowance, conveyance allowance, bonus payable under any law and other) provide the exclude components do not exceed 50% of total remuneration.
In simple words, one can say that employees will be paid for all the allowances on a per-day basis except those allowances that are specifically exclude.
