The Indian government will not change the definition of wages despite concerns from industry over the impact of the new labour law regime on wage bills, a top government official said on Wednesday.
“The definition of wages is a part of the Codes and that cannot be addressed through the rules,” Labour and Employment Secretary Apurva Chandra told BloombergQuint in an interview on Wednesday evening while replying to a question on whether the government will bring any changes to the new definition of wages following concerns raised by the industry.
The secretary said that during the recent consultations on the new labour codes, which will likely be implemented from or before the next fiscal, “the major issue” flagged by the industry was on the definition of wages and “how it will impact the take-home salary of workers and lead to a higher outgo on PF and gratuity.”
Once the new labour codes kick in, the way companies structure employee salaries will undergo a significant change. According to the new law, the salaries will have to be structured in a manner so that all the monetary allowances — house rent, leave travel, overtime, conveyance, among others — are capped at 50% of the wage of an employee, which will include the basic pay, dearness allowance and retention pay.