The government's new labour codes, introduced in late 2025, bring significant changes that are expected to affect salary structures, provident fund contributions, gratuity payments, ESI benefits, bonus calculations, and several other employment-related components. One of the most important changes under the new framework relates to the revised method of calculating wages. Since the definition of wages has been expanded, the base used for computing employee benefits is also expected to increase.
Key Provisions of the New Labour Codes
Some major provisions included in the new labour codes cover areas such as minimum wages, gratuity eligibility for fixed-term employees after completing one year of service, permission for women to work night shifts, welfare measures for gig workers, and a standardised definition of wages across sectors.
Impact on Employee Compensation
The revised labour framework is also expected to influence multiple aspects of employee compensation, including salary components, gratuity calculations, and provident fund contributions.
Redefinition of Wages
Under the new labour codes, the definition of “wages” includes most elements of an employee’s salary. However, certain components remain excluded under the prescribed list. These exclusions include House Rent Allowance (HRA), conveyance allowance, travel concession value, bonuses payable under law, commissions, and amounts paid to cover special expenses arising due to the nature of employment, among others.
Under the revised labour framework, these excluded components are not permitted to account for more than 50% of an employee’s total remuneration. If the combined value of such exclusions crosses the 50% threshold, the excess amount will be treated as part of wages. This ensures that a minimum of half of the total remuneration is categorised under wages.
Important Documents and Charts
Check all the important documents and charts related to the New Labour Codes in this Google Pinpoint collection.
Ready to Make a Smarter Property Decision? Build Your Legacy with TOI Homes.
