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New Wage Code: Big news! Your Take Home Salary will decrease in the new year? Preparation for implementation of new wage code

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New Wage Code: Compulsory of 5 years for Gratuity to end! Know how many years the company will give gratuity on the job

Once again the discussion has started regarding the new wage code. The new wage code was to be implemented from October 1, 2021, but the Ministry of Labor postponed it. Now it can be implemented from the new year.


New Wage Code Update: Once again the discussion has started regarding the new Wages Code. The new wage code was to be implemented from October 1, but the labor ministry deferred it. Now it can be implemented from the new year. If this happens, then a big change can be seen in the salary structure of the job seekers. There may also be a reduction in the Take Home Salary of the employees.

What is New Wage Code?

The government has prepared 4 new wage codes by combining 29 labor laws. these are the four codes

1- Industrial Relations Code
2- Code on Occupational Safety
3- Health and Working Conditions Code (OSH)
4- Social Security Code and Code on Wages

According to the Wage Code Act, 2019, the basic salary of an employee cannot be less than 50% of the cost of the company (CTC). At present, many companies reduce the basic salary and give more allowances from above so that the burden on the company is reduced.

Salary structure will change completely

It is worth noting that after the implementation of the Wage Code Act, 2019, the salary structure of the employees will change completely. The ‘Take Home Salary’ of the employees will decrease, because by increasing the Basic Pay, the PF of the employees will be deducted more, that is, their future will be more secure. Along with the PF, the contribution to the gratuity will also increase.


That is, the take home salary will definitely decrease but the employee will get more amount on retirement. The new wage code will also be applicable for the employees of the unorganized sector. The rules related to salary and bonus will change and there will be equality in the salary of employees working in every industry and sector.

Working hours, holidays will also be affected

There is to be a change in the rules on important issues like working hours of employees, annual holidays, pension, PF, take home salary, retirement. According to an official of the Labor Reform Cell of the Ministry of Labor, the labor union has made a demand regarding PF and annual holidays, the union is demanding that the Earned Leave should be increased from 240 to 300.

Companies’ headache will increase

Let us tell you that the CTC of the employees depends on many factors. Like Basic Salary, House Rent (HRA), PF, Gratuity, LTC and Entertainment Allowance etc. With the implementation of the new Wage Code rule, companies will have to decide that the other factors to be included in the CTC, except the basic salary, should not exceed 50 percent. This can increase the headache of companies.

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