Apart from the draft rules, the government has also published a list of FAQs on what the new labour codes mean, definition of wages, gratuity calculation etc. (AI image)

New Labour Codes: The Ministry of Labour has pre-published draft rules under new labour codes on Wednesday. These draft rules are open for public consultation, and stakeholders have been invited to submit objections and suggestions within 45 days (30 days for Industrial Relations Rules).

The government has clarified that during the transition period, existing rules will continue to apply until new rules are notified under the Labour Codes, as long as they are consistent with the Codes. Why are the new labour codes important? There are changes in the way provident fund contributions, wages, gratuity are calculated, along with a host of other measures. A uniform definition of “wages” now applies across all four Labour Codes and includes basic pay, dearness allowance and retaining allowance, with a 50 percent cap on allowances.

Any allowance, excluding gratuity and retrenchment compensation, that exceeds 50 percent of total remuneration will be added back to wages for statutory calculations, while items such as performance incentives.Puneet Gupta, Partner, People Advisory Services-Tax, EY India says that the draft central rules under the four labour codes provide clarity on several operational aspects that employers have been awaiting.

“For instance, the Code on Social Security Rules specify that gratuity will be calculated on ‘wages’ last drawn, excluding components such as annual performance-linked pay, medical reimbursements, stock options, and meal vouchers. This clarification will help organizations estimate their gratuity liability more effectively,” he says.“Similarly, the Occupational Safety, Health and Working Conditions Rules introduce important provisions on overtime and working conditions.

Workers will now be entitled to double wages for any work beyond 48 hours in a week, and employers must ensure substituted rest days without exceeding ten consecutive working days. These measures aim to balance productivity with employee well-being,” he adds.According to Puneet Gupta, other notable provisions include annual medical check-ups for employees above 40 years in specific sectors such as factory, dock, mine, building & other construction work, creche allowances of at least Rs 500 per child where creche facilities are not provided, and journey allowances for inter-state migrant workers. Apart from the draft rules, the government has also published a list of FAQs on what the new labour codes mean, definition of wages, gratuity calculation etc.