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SALARY STRUCTURE UNDER THE LABOUR CODES

Salary Structure under India's New Labour Codes (2026)India's four new Labour Codes, implemented from November 21, 2025, consolidate 29 old laws and introduce a uniform definition of "wages" under the Code on Wages, 2019. Wages include basic pay, dearness allowance (DA), and retaining allowance (if any).A key rule mandates that these components must constitute at least 50% of total remuneration (CTC). Excluded items (e.g., HRA, conveyance, overtime, bonuses, employer PF contributions) cannot exceed 50%; any excess is added back to wages.This requires companies to restructure salaries, often increasing basic pay from typical 30-40% levels. Result: Higher contributions to PF (12% of wages) and gratuity, boosting long-term retirement benefits but potentially reducing take-home pay (unless CTC rises).Other changes include timely wage payment (by 7th of month), universal minimum wages, and expanded social security. The reform promotes transparency, equity, and stronger worker protections while aligning with global standards.

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