Is the Basic Salary Really 50% of Gross Under the New Wage Code 2022? Seeking Official Notification

I had heard that as per the "new wage code 2022," the basic salary must be 50% of the gross salary. Can anyone send me the Government notification regarding this matter, where the same has been mentioned?

There is no mention of this in the Labour Codes. In the Labour Codes, the definition of wages has been made uniform for all purposes. Even in the present scenario, it is almost the same, but under the new codes, a more confusing definition has been provided. The definition states that allowances exceeding 50% of the basic salary will be added to your basic salary. This definition is problematic because it includes overtime in the allowances! This implies that for an employee earning overtime wages, the basic salary will keep increasing.

For further clarification, you can refer to any of the new Labour Codes.

Probably, you can take a clue from the 'Minimum Wages' notified by the state governments for different categories from time to time. In that schedule, you can find the basic, DA, etc., applicable at any point in time.

New Wage Code Overview

The New Wage Code (yet to be implemented) has defined wages scientifically. Wages mean all remuneration payable to a person expressed in money and include Basic, DA, and RA. It excludes items mentioned in (i) to (k).

Exclusion and Inclusion in Wage Calculation

If the amount of exclusion under (a) to (i) is more than 50% of the total remuneration payable under this clause, the excess amount will be added back to Wages - Basic and DA or only Basic.

Calculating Basic Wages

To calculate Basic wages, it is essential to find out the total CTC EXCLUDING ESIC, Gratuity, Insurance premiums, etc., as mentioned in the definition, and 50% of the same will be Basic.

Minimum Wages Compliance

As per the definition, there is no need for any circular. If the calculated Basic is less than the notified Minimum wages, then minimum wages should be Basic.

Variable Dearness Allowance (VDA) and Overtime (OT) Considerations

As VDA is changed monthly/quarterly/6 monthly, etc., and accordingly Basic and DA are changed, similarly, OT will be considered.

Regards, S K Bandyopadhyay (WB, Howrah) CEO USD HR Solutions [Phone Number Removed For Privacy-Reasons] [Email Removed For Privacy Reasons] www.usdhrs.in

There is one small correction in the above post. In paragraph (2) above, it should be (a) to (k) instead of (i) to (k).

Regards, S K Bandyopadhyay