7th Pay Commission Latest News: How new Wage Code will affect central government employees' salary—EXPLAINED

7th Pay Commission latest news: There is a massive change in the salary of central government employees is on the cards. The monthly Provident Fund (PF) contribution and Gratuity of the central government employees may change from 1st April 2021. As per several media reports the government might introduce new wage code from the new financial year. This was also indicated by Secretary Labour & Employment Apurva Chandra when he elaborated upon the budgetary allocation and provisions recently. 

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The new wage code has the provision to have one's basic salary at least 50 per cent of one's net monthly CTC. Means, if the new wage code gets implemented from April 1, 2021, then no one will be able to get more than 50 per cent of one's net monthly salary in form of allowance i.e. monthly allowance can't be more than 50 per cent if the new wage code gets implemented.   

"This (The) Ministry would soon be in a position to bring into force the four Codes, viz., Code on Wages, Industrial Relations, Occupational Safety, Health and Working Conditions and Social Security Codes," Apurva Chandra, Secretary, Labour & Employment, had said. He said that all stakeholders are also consulted in the framing of rules.   

As one's monthly PF contribution and Gratuity is a part of one's monthly basic salary. After the implementation of the new wage code will lead to change in one's monthly PF and Gratuity contribution. However, it is yet to be seen whether the wage code gets implemented from 1st April 2021 or not as the centre is yet to make any deadline for implementation of the new wage code.   

Finance Minister Nirmala Sitharaman had announced the new wage code in her Union Budget 2019 and after that, the central government is yet to implement it. But, some media reports are claiming for implementation of the new wage code after the recent announcement by the Secretary Labour & Employment in this regard.   

Since the central government is in the process of finalising the wage code, it is not clear whether the monthly salary of a government or a private employee (having EPF account) will go up or down due to new monthly contribution of the PF, EPF and Gratuity, but it's for sure that one's PF, EPF and Gratuity contribution will change.   

This change in Provident Fund (PF) may also impact private sector employees' EPF passbook balance as the new wage code that is likely to get implemented from 1st April 2021.