Employees may have to wait longer for new wage code rules to kick in

The changes under the new wage code can only be implemented across the country once the centre receives draft guidelines from all the states and UTs

A new legal code nudging companies to speed up the final payment of employees who resign could be delayed as several states are yet to draft rules for implementation.

The code on wages are a constitutional requirement and must be framed based on central government guidelines. It will be implemented once the centre receives draft guidelines from all states and UTs.

According to the code, companies are required to pay the full and final settlement payment within two days of an employee's last working day. This can be due to resignation, dismissal or removal from employment. Presently, companies take between 15 to 60 days in paying the final settlement.

The new wage code reads, "Where an employee has been - (i) removed or dismissed from service; or (ii) retrenched or has resigned from service, or became unemployed due to closure of the establishment, the wages payable to him shall be paid within two working days of his removal, dismissal, retrenchment or, as the case may be, his resignation."

However, gratuity and provident funds do not come under the ambit of the new wage code. It applies only to remuneration by the way of salaries or allowances. The rule is expected to come as a major relief to the employees who serve long notice periods and have to wait to get their final payments.

Under the code, basic salary will become 50 per cent of the total. The code will increase contribution to the Employees' Provident Fund, setting it as 12 per cent of the basic pay. Gratuity and retirement corpus will go up as well, but take-home salary may decrease.

Companies are allowed to make employees work for 12 hours a day, for 4 days a week. The number of working days may go down but hours will remain the same.