There is another good news for government employees. In the forthcoming Budget 2025, the government is expected to unveil new labor codes that could lead to major shifts in working hours and employee benefits.
Sources indicate that Union Finance Minister Nirmala Sitharaman might introduce these labor codes gradually, impacting not just employees but also business owners. The implementation will occur in three distinct phases, presenting both challenges and opportunities for employees and businesses alike.
Phased Implementation of Labor Codes
The primary goal of these new labor codes is to enhance workplace efficiency and bolster employee social security. This initiative will influence businesses of all sizes. In the initial phase, large enterprises with over 500 employees will need to comply with these codes. The second phase will extend to medium-sized businesses with 100 to 500 employees, while the final phase will encompass small businesses with fewer than 100 employees.
Small businesses will have approximately two years to adapt to these new regulations. Given that micro, small, and medium-sized enterprises (MSMEs) make up 85% of India’s business landscape, their adjustment will be crucial.
Effects on Work Hours and Pay
These new regulations might introduce a four-day workweek with three days off, aimed at promoting a better work-life balance for employees. However, this shift to a four-day schedule could result in longer working hours, and increased provident fund (PF) contributions might lead to a decrease in employees’ take-home pay.
Discussions with States and Regulatory Framework
The labor ministry is currently engaging with various states, including West Bengal and Delhi, to roll out these codes, with draft regulations nearing completion. The government aims to have the Wages and Social Security Code in place by March 2025, while the remaining codes are being developed in collaboration with other states.