New Labour Code Calculator — See How Your Salary Changes
India's new Labour Codes require your basic salary to be at least 50% of CTC. See exactly how this changes your PF, gratuity, and monthly take-home pay.
⚠ Your basic (40%) is below the 50% minimum under new Labour Code. Employer must raise basic to 50,000 /mo.
Metro = Delhi / Mumbai / Chennai / Kolkata
Take-Home Change
-₹2,400/mo
Lower take-home — money goes to PF
Annual Impact
PF saved extra
₹28.8K/yr
Extra gratuity
₹5.8K/yr
Calculate by Salary
What Is the New Labour Code and How Does It Affect Your Salary?
India's four new Labour Codes — the Code on Wages (2019), Industrial Relations Code (2020), Code on Social Security (2020), and Occupational Safety Code (2020) — became effective on 21 November 2025. The most impactful change for salaried employees is the 50% basic wage rule: your basic salary must be at least 50% of your total CTC (Cost to Company).
Why This Matters
For years, many Indian employers kept basic salary artificially low — sometimes just 20-30% of CTC — to reduce PF and gratuity liability. The new rule ends this practice. A higher basic means higher PF contributions (both yours and your employer's) and higher gratuity accrual. In the short term, your monthly take-home may reduce slightly; in the long term, you build a significantly larger retirement corpus.
The Trade-off: Take-Home vs Corpus
For a ₹15 LPA employee with basic at 35% (₹4.375L/year), moving to 50% (₹7.5L/year):
- Employee PF increases from ₹4,375/mo → ₹7,500/mo (₹3,125 more deducted)
- Employer PF increases similarly (builds your retirement corpus)
- Gratuity accrual increases from ₹2,524/mo → ₹4,327/mo
- Monthly take-home reduces by approximately ₹3,000-4,000
- But annual PF + gratuity benefit increases by ₹80,000+
The money doesn't disappear — it's diverted into your EPF account and gratuity fund. For long-term financial security, the new rule is net positive for employees.
Frequently Asked Questions
What is the 50% basic salary rule under new Labour Codes?
Under the Code on Wages 2019 and Code on Social Security 2020 (effective 21 November 2025), an employee's basic wage must be at least 50% of their total salary/CTC. This means companies can no longer keep basic salary artificially low (e.g., 20-30% of CTC) to reduce PF and gratuity contributions.
Will my take-home salary decrease under the new Labour Code?
For most employees whose current basic is below 50% of CTC, take-home will reduce slightly. However, the money is not lost — it goes into your PF account and gratuity corpus. Employees with basic already at 50% or above will see no change.
When did the new Labour Codes become effective in India?
The new Labour Codes (Code on Wages 2019, Industrial Relations Code 2020, Code on Social Security 2020, and Occupational Safety Code 2020) became effective on 21 November 2025, after most Indian states notified the rules.
How does the new Labour Code affect PF contributions?
With a higher basic salary (minimum 50% of CTC), both employee PF (12% of basic) and employer PF (12% of basic) increase proportionally. This builds a larger retirement corpus but reduces monthly take-home by the incremental employee PF amount.
What happens if my employer doesn't comply with the 50% rule?
Employers who do not restructure salaries to comply with the 50% basic wage rule are liable to penalties under the new labour codes. Employees can file complaints with the relevant labour authorities. The EPFO also has the power to recover underpaid PF contributions.
Does the new Labour Code apply to all companies?
The Code on Wages applies to all establishments. The Code on Social Security (which governs PF and gratuity) applies to establishments covered under EPF Act (typically 20+ employees) and the Payment of Gratuity Act (10+ employees). Contract workers and gig workers may also be covered under certain provisions.