How Much Will Your
Salary Change?
What changes under the new labour codes?
If your salary structure has a low basic-pay component today, the revised wage rules may push your basic salary higher. That can increase provident fund and gratuity contributions while reducing your monthly take-home pay. This calculator helps you estimate the likely impact before and after salary restructuring.
What Changed Under the New Labour Codes?
Basic Pay Rule
Basic Pay + DA must now be at least 50% of your CTC (Code on Wages, 2019 Section 2(88)). If your current Basic is lower, it must be restructured.
EPF / PF Impact
Your EPF (Provident Fund) deduction increases because EPF is 12% of Basic. Higher Basic = higher PF = lower monthly take-home, but bigger retirement corpus.
Gratuity Eligibility
Fixed-term contract employees are now entitled to pro-rata gratuity upon contract completion — the 5-year minimum is waived for them (Code on Social Security, 2020 Section 53(1) second proviso). Permanent employees still require 5 years of continuous service (≈ 4 yrs 240 days in practice) before becoming eligible.
Full & Final Settlement
Your employer must settle all dues (F&F) within 2 working days of your last day, under the Industrial Relations Code, 2020 Section 77.
Regulatory Reference
| Code | Key Provision | Impact |
|---|---|---|
| Code on Wages, 2019 Section 2(y) | Basic+DA ≥ 50% of total remuneration | Core restructuring trigger |
| Code on Social Security, 2020 Section 53 | EPF basis = Basic+DA at 12%; FTE gratuity on contract end (5-yr waived); permanent employees: 5 yrs | EPF delta + gratuity output |
| Code on Social Security, 2020 — ESI | ESI ceiling ₹21,000 gross/month | ESI branch in calculation |
| Industrial Relations Code, 2020 Section 77 | F&F settlement within 2 working days | Displayed as benefit |
All four codes are in force from 21 November 2025 per MoLE notification (PIB Release ID: 2192463).
How the new salary structure may affect your pay
| Component | Before | After |
|---|---|---|
| Basic salary | Usually kept lower in many salary structures | Becomes 50% of the CTC under the revised rules |
| PF contribution | Lower if basic pay is less | May increase if basic component increases |
| Gratuity | Lower base for many employees | May increase as it is linked to basic pay |
What is the 50% basic salary rule and why does it matter?
The revised wage framework changes how salary components are treated. In many compensation structures, allowances used to occupy a larger share of total pay. When the wage base rises and basic salary moves closer to 50% of total pay, statutory contributions such as provident fund and gratuity can increase. That is why many employees may see a lower monthly take-home salary even when total CTC does not change.
How to read your salary impact under the new labour codes
This calculator helps you estimate how the revised definition of wages under the new labour codes could change your salary structure. For many salaried employees, the biggest impact may not be on annual CTC, but on how salary is split between wage-linked components and allowances. That change can affect monthly take-home pay, provident fund contribution and gratuity accumulation.
The revised definition of wages came into effect on 21 November 2025. That means the result shown here should be read as an estimate under the post-code framework. Your final payroll treatment may still vary depending on your employer's salary structure, PF basis and compensation mix.
What changes from 21 November 2025?
Under the new framework, the way wages are defined becomes more important than before. Two employees with the same CTC may not see the same outcome if their salary components are structured differently. A salary structure with a lower wage-linked base may see a sharper change than one where the wage-linked portion is already higher.
What counts toward wages under the new rules?
Some salary components are treated as part of remuneration for applying the wage rule. The official clarification says statutory components such as employer PF and pension contributions and statutory bonus are included for arriving at remuneration. It also says overtime allowance forms part of the wage calculation.
That is why the estimate can change depending on your PF basis, overtime component and current salary split.
What is not counted the same way?
Not all components are treated alike. The official clarification says gratuity, ESI and other retirement benefits are not included for arriving at the 50% remuneration threshold. It also says annual performance-based incentives do not form part of wages for this computation.
This is important because many employees look at CTC as one number. In reality, the impact depends on which parts of that CTC are wage-linked and which are excluded or variable.
Why can your take-home salary fall even if your CTC stays the same?
A lower in-hand salary does not automatically mean your overall compensation has been cut. In many cases, monthly take-home pay falls because the wage-linked base rises, which can increase statutory contributions linked to that base. When that happens, more of your compensation moves into PF and gratuity-linked treatment, even if total CTC remains unchanged.
Why gratuity may increase under the new wage definition
The official FAQs clarify that gratuity based on the revised definition of wages applies from 21 November 2025. If your wage-linked base rises, gratuity calculations may improve over time as well. That means some employees may see a trade-off: lower monthly in-hand salary, but potentially higher long-term gratuity benefit.
The gratuity figure shown here is only an estimate. Actual payout depends on tenure, separation date, service conditions and employer records.
A note on ESI, PF basis, and actual payroll treatment
For ESI, the revised wage definition under the Code on Social Security applies from 21 November 2025, while the currently notified ESI coverage threshold remains ₹21,000 per month wages.
PF impact can also vary depending on whether contributions are calculated on actual basic salary or on the statutory ceiling. That is one reason why two people with the same CTC may see different outcomes on this calculator.
Important note before you use this result
This calculator is for information purposes only. It is designed to help you estimate how a revised wage definition may affect take-home salary, PF and gratuity. It is not a legal opinion, payroll instruction or substitute for employer-issued salary documents. In case of any variance, the applicable law and official rules will prevail.
Related guides
- 50% Basic Rule Explained
- What counts as wages
- PF Impact Under the New Labour Codes
- Gratuity calculation after salary restructuring
- Full list of what India's new labour codes change
- Gratuity rules explained: who is eligible and how it is calculated
- How car lease in CTC can reduce your tax outgo
- In-hand salary and tax impact
- Tax burden under revised salary structure
This calculator is for informational purposes only and does not constitute legal or financial advice. Consult your HR / payroll team for company-specific salary restructuring. Calculations use central rules; state-specific variations may apply. We respect your privacy—your salary data will be used solely for this calculation and not used beyond this purpose.