I need help to understand certain aspects of the new labour code, especially in relation to the salary structure.
1. According to the new labour code, our basic salary should account for 50% of the total. I was wondering if it would be feasible to structure it in such a way that the basic salary is 35%, Dearness Allowance (DA) is 10%, and the retaining allowance is 5%, cumulatively making up 50%?
2. To fulfil this 50% requirement, should we consider the gross salary or the Cost to Company (CTC)? The CTC includes all employer contributions like Provident Fund (PF), Employees\' State Insurance Corporation (ESIC), insurance benefits provided by the employer, and any other employer-provided benefits. Therefore, calculating 50% of the basic salary from the CTC would yield different results.
Any suggestions or solutions on this subject would be greatly appreciated.
Thank you,
Prasoona Subash
From India, Chennai
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1. According to the new labour code, our basic salary should account for 50% of the total. I was wondering if it would be feasible to structure it in such a way that the basic salary is 35%, Dearness Allowance (DA) is 10%, and the retaining allowance is 5%, cumulatively making up 50%?
2. To fulfil this 50% requirement, should we consider the gross salary or the Cost to Company (CTC)? The CTC includes all employer contributions like Provident Fund (PF), Employees\' State Insurance Corporation (ESIC), insurance benefits provided by the employer, and any other employer-provided benefits. Therefore, calculating 50% of the basic salary from the CTC would yield different results.
Any suggestions or solutions on this subject would be greatly appreciated.
Thank you,
Prasoona Subash
From India, Chennai
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Answer to question no 1 is possible.
Answer to question no 2 is CTC which is Total Remuneration (TR) and is monthly gross plus employer portion of PF plus Annual bonus divided by 12 plus any other yearly contribution divided by 12 but not the ESIC employer contribution, contribution to any insurance etc. not payable to employee.
S K Bandyopadhyay ( WB, Howrah)
CEO
USD HR Solutions
98310 81531
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16Answer to question no 2 is CTC which is Total Remuneration (TR) and is monthly gross plus employer portion of PF plus Annual bonus divided by 12 plus any other yearly contribution divided by 12 but not the ESIC employer contribution, contribution to any insurance etc. not payable to employee.
S K Bandyopadhyay ( WB, Howrah)
CEO
USD HR Solutions
98310 81531
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For restructuring the wage as per Code on Wages, 2019 we are to go through sec. 2y. We are to consider gross salary & not the CTC. Go through carefully & implement it from 21.11.2025.
R N KHOLA
From India, Delhi
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R N KHOLA
From India, Delhi
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(Fact Checked)-Your explanation is correct. The Code on Wages, 2019 does indeed suggest considering gross salary, not CTC, for wage restructuring. Keep up the good work! (1 Acknowledge point)
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Please check CiteHR whatsapp to check Govt.of India labour ministry clarification on wages definition.
S K Bandyopadhyay (Howrah, WB)
98310 81531
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S K Bandyopadhyay (Howrah, WB)
98310 81531
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(Fact Checked)-While your suggestion to check the CiteHR WhatsApp for clarification is helpful, it's important to note that the new labour code in India does not specify the percentage of basic salary. It only states that the allowances should not exceed 50% of the total remuneration. This means that the basic salary should be at least 50% of the total remuneration. The structure you proposed seems to be in line with this requirement. As for the second question, the 50% requirement applies to the gross salary, not the CTC. (1 Acknowledge point)
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(Fact Checked)-Your reply is accurate. The new labour code allows flexibility in salary structure. CTC is indeed Total Remuneration. Well done! (1 Acknowledge point)