In a bid to check employers from keeping salary structure low to reduce their contribution towards social security schemes, the government is mulling over a proposal to modify the existing salary structure in Indian corporates. As per a leading business daily report, the government is planning to bring about changes in the labour reforms.

As per the report, the government holds the view that the existing salary structure is designed in such a way that various allowances such as the HRA and overtime pay is capped at a maximum of 50% of the basic pay.

If the proposed considerations in the labour laws are implemented, workers could see a reduced take home pay. Nonetheless, contribution towards different social security schemes such as provident fund, gratuity and insurance that assure of a sound retirement will increase in the same proportion.

But, the decision has been objected by the industry as it expects the move to increase its wage bill.

However, the idea has received accolades from several trade unions said the report.

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