Budget 2025: The Modi government may announce the implementation of labor code rules in the budget. Union Finance Minister Nirmala Sitharaman may announce a plan to implement the Labor Code in a phased manner in the upcoming budget. According to sources, these new labor codes will be implemented in three phases. Their aim is to make labor laws simpler and more effective to benefit both employees and employers. Working hours may be extended under the new code, but four days of work and three days of rest per week will also be facilitated to improve work-life balance.
Under the new labor code, the working hours of employees may be increased from 8 to 12, however, the total working hours in a week will be only 48. This means that if you work for four days, you will have to work for 12 hours a day and rest for three days. This change may be beneficial for employees who want the convenience of long weekends.
The government has planned to implement the labor code in a phased manner so that companies and industries can prepare themselves accordingly.
First Stage: Applicable to large companies with more than 500 employees.
Second stage: Medium companies with 100-500 employees.
Third Stage: For small companies with less than 100 employees.
MSME sector which accounts for 85% of India’s economy. The MSME sector will get about two years for this change. The Ministry of Labor is working with states to draft new codes. In the first phase, the Code on Labor and Social Security will be implemented. The draft rules are expected to be finalized with all states by March 2025.
What are labor codes?
The 29 central labor laws have been consolidated into four labor codes. The purpose of these codes is to modernize and simplify labor laws.
Work four days a week and rest three days
Under the new code, employees can have the option of working four days and rest three days a week. However, after working for four days, the working hours will be 12. This change can be beneficial for employees who want to devote more time to their family or personal activities.
Contribution to provident fund will increase
Under the new codes, employees’ contribution to the Provident Fund (PF) will increase. This will increase their retirement fund. However, due to the increase in PF deduction, the take home pay (monthly salary) of the employees may decrease.