- Around 25% of the organizations are planning to include
variable pay in the wage definition. - One out of three organizations in
India are also likely to increase thebasic pay , as perWTW report . - 40% of organizations are expecting to have a significant impact on their profit and loss statement due to gratuity.
In fact, 25% of the organizations are planning to include variable pay in the wage definition. But, a similar percentage of them are also unsure about what to do, reveals a new WTW report on ‘State of Retirement benefits in India’.
Variable pay is also known as performance pay and is given to an employee based on the results of their performance. It is usually offered in addition to the employee's fixed salary on completion of certain targets.
One out of three organizations in India are also likely to increase the basic pay as a part of the new wage code.
The four
These four codes will replace the existing 29 labour laws in India.
Code on Wages will ensure timely payment of salaries and wages both in organized and unorganized sectors. Industrial Relations Code expands the definition of worker to be included under — skilled, unskilled, manual, technical, clerical and operational workers.
Code on Social Security is about social security schemes like EPF, EPS, ESI — which are beneficial to the employees and workers.
According to the report, 40% of organizations are expecting the code to have a significant impact on their profits; and are considering options to update their gratuity policy to mitigate the impact. While 28% say that they will not change their gratuity policy and are not expecting any change in their P&L.
Gratuity benefits are projected to have the largest impact in the new definition of wages. It is paid to employees who exit their companies after working for over five years.
In the new code, the gratuity is expected to increase significantly, particularly for organizations where the basic pay to gross pay ratio has been quite low previously.
The report further suggests that over 46% of the organizations would continue to contribute 12% of basic salary as per prevailing regulation in the provident fund. However, 8% say that they will restrict the PF upto ₹15,000 per month.
As many as 32% of the organizations are unsure about what to do with the provident funds for its employees, says the report.
During COVID-19 pandemic, a lot of companies had provided extra sick leaves to their employees as the infection required proper isolation and rest. This has led three out 10 organizations to restructure their leave policies, the report says.
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