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Decoding the Code on Social Security – Financial implications for employers

Health and Benefits|Retirement|Total Rewards|Integrated Wellbeing
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January 7, 2021

Share further details on areas where companies are likely to see the most material financial implications based on recent client discussions.

It has now been over two months since the new labour codes were approved by the Parliament. The draft rules have also been circulated for public comments, and the target implementation date of April 1, 2021, is expected to be on track.

Willis Towers Watson had shared a note earlier in October 2020 on the implications of the Social Security Code on retirement benefits. Over the past several weeks, we have discussed these implications in more detail with some of India’s leading companies. While several questions are still unanswered and further clarity is awaited, we see some common themes emerging even as companies look to assess the impact of the changes.

We have attempted to respond to some of these questions and provide further details on areas where companies are likely to see the most material financial implications based on our recent discussions.

We urge employers to review the compensation structures in order to determine what changes may be required in order to ensure compliance with the codes. Further, they should also assess the potential impact on any long-term employee benefit obligations (such as gratuity) on the company’s books of accounts so that any impact can be budgeted in advance.

As always, we are committed to providing clarity and confidence to you, our valued clients. To help you better understand and prepare for the people, risk and insurance implications for your organisation, our team of experts remain available to assist you.

To view this latest note, complete the form and click Submit.

Disclaimer

This note should not be considered as a formal legal or tax advice. This view is subject to the interpretation of concerned regulatory authorities

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