Archive · 13 Dec 2025
New Labour Codes Clarified: Impact on Salaries
The government has introduced new Labour Codes that change how salaries are structured.
At least half of your salary must now be basic pay, which includes things like basic salary, dearness allowance, and retaining allowance.
This change means that more of your salary will be used for things like Provident Fund (PF) and other savings.
While your total salary (CTC) might stay the same, you might take home less money each month because more is being put into savings.
However, this means you will have more money saved for retirement.
The government has said that PF will still be calculated based on a limit of ₹15,000, so if your salary is below that, your take-home pay won't change.
These new rules were made by combining 29 old laws into four new ones to make things simpler for businesses and workers.
The new Labour Codes require at least 50% of total wages to be basic pay, dearness allowance, and retaining allowance.
PF contributions will continue to be calculated on the existing statutory wage ceiling of ₹15,000 unless employers and employees mutually choose to contribute on a higher amount.
The new wage structure may lead to higher social security contributions, potentially reducing immediate take-home salary.
The government has clarified that mandatory PF deductions will not apply to the full salary, ensuring no change in take-home pay for those earning below the wage ceiling.
Employees may need to reassess their financial planning to optimize their overall compensation and savings.
- Who
- Government of India, Employees, Employers
- What
- Implementation of New Labour Codes and their impact on salaries and savings
- When
- After the announcement of Labour Codes on 21 November
- Where
- India
- Why
- To promote ease of doing business, protect workers' rights, and ensure a consistent base for social security benefits
- PF Wage Ceiling
- ₹15,000
- PF Contribution Rate
- 12%
- Basic Pay Requirement
- At least 50% of total wages
- Labour Codes Announcement Date
- 21 November
- Number of Merged Laws
- 29
- New Labour Codes
- Code on Wages, Industrial Relations Code, Social Security Code, Occupational Safety Code
- Impact on Take-Home Pay
- May decrease due to higher social security contributions
- Long-Term Savings
- Increased retirement corpus due to higher contributions
Sources
New Labour Codes: Will it slash your take-home salary? Govt clarifies amid PF deduction concerns
New Labour Codes Will Ensure Frictionless Supply Chains, Universal Wage Coverage & Skill Enhancement
New labour code: How in hand salary, wage structure, savings would change from now on
