• New Labor Law


• How will the change be?


• How much salary will be received in hand

The Indian government on Friday announced the implementation of four labor codes in a major step for the country’s workers. The decision will come into effect from November 21, 2025 and its primary objective is to simplify labor laws and ensure better wages, safety, social security and welfare for workers.

These four codes include ‘Labour Code 2019’, ‘Industrial Relations Code 2020’, ‘Social Security Code 2020’ and ‘Occupational Safety, Health and Working Conditions Code 2020’. The decision will streamline 29 existing labor laws and move away from old colonial-era systems to align with modern global trends. This new labor code will also change the salary structure of people.

What will be the salary changes?

Now, at least 50% of the salary of the employee will be the basic salary. This rule is enforced under the ‘Wage Code’. This means that the amount going to Provident Fund (PF) and gratuity will increase.

PF And gratuity is calculated on the basis of basic salary. When the basic salary increases, the contribution to PF and gratuity from both the employee and the company will increase. This will increase the employee’s retirement savings, but may reduce take-home pay slightly. This will happen because the total salary (CTC) will remain the same, but the PF and gratuity component of CTC will increase.

Companies will have to change their structure

This new rule came into force from Friday. However, the government will announce its rules in the next 45 days. After this, companies will have to change their salary structure according to these rules.

Digital Life Certificate: Big gift to pensioners by Post Office and EPFO..! This certificate can be submitted free of cost at home

Why was this rule implemented?

By preventing companies from deliberately keeping base salaries low and increasing allowances PF And this rule has been introduced to prevent them from reducing their contribution to gratuity. Currently, 12% of PF is deducted from basic salary. The amount of gratuity also depends on the previous basic salary and the number of years of service with the company.

What do the experts think?

Suchita Dutta, Executive Director, Indian Staffing Federation Said that as per the new labor code, the definition of pay (salary) has been made uniform under ‘Wage Code’ and ‘Social Security’. This will improve gratuity and provident funds, but could reduce take-home pay if companies cut perks to cut costs.

Anjali Malhotra, Partner, Nangia Group He explained that the salary will now include Basic Pay, Dearness Allowance (DA) and Retaining Allowance (RA). 50% of gross earnings (or any other percentage decided by the government) will be added to ‘wages’. This will bring uniformity in calculation of gratuity, pension and social security benefits.

Big relief to employees! Now 75 percent can be withdrawn from PF immediately after leaving the job; The two month wait is over

How will it be different from the past?

Earlier, companies used to keep a small amount of basic salary and distribute the remaining amount as various allowances. This reduced their contribution to PF and gratuity. However, now the government has mandated that at least half of your total pay (CTC) should be your basic salary. This will increase your retirement savings, but may decrease your monthly salary. In a sense, this is a good step towards your future security, even if it is a bit heavy on your pocket right now.