Is the New Wage Code in Karnataka Affecting Salary Breakup and EPF Calculations?

Hello all, in Karnataka state, has the new wage code been implemented? If it has been implemented, we can structure the salary breakup as follows:

1. Basic & DA: 50% of Gross
2. HRA: 40% of Basic and DA
3. Conveyance: Fixed at Rs. 1050 as Bangalore BMTC Monthly Pass charge
4. The remaining amount will be considered as other allowances.

EPF is calculated from the amount other than HRA. If we calculate EPF based on Basic and DA wages, the EPF contribution will be less than the previous year.

Are the above points legally accepted? Are there any issues? Please provide your suggestions.

New Wage Code Implementation in India

The New Wage Code has not been implemented to date. When it is implemented, it will be the same for all states in India. There will not be anything special for Karnataka.

Definition of Wages Under Labor Codes

As per the definition of wages under all labor codes, including the Wage Code, wages will be determined as follows:

1. Determine the CTC of each employee.
2. Judiciously identify the summation of all payable amounts expressed in terms of money, which is nothing but all remuneration calculated under this clause (WAGES).
3. 50% of item (2) above will be Basic & DA.
4. The other 50% will be the employer's contribution to PF, statutory bonus, HRA, conveyance allowance, LTA if any, etc.
5. If it is noticed that Basic & DA is less than ₹15,000 per month, then other than HRA and considering all other monthly allowances, determine the PF contribution amount accordingly subject to a maximum of ₹15,000, i.e., PF contribution of ₹1,800 per month based on the February 2019 Apex Court verdict.

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