Find the answers to the most commonly asked questions about our services below
The Government of India has simplified 29 existing labour laws into four Labour Codes to make compliance easier for employers and to improve protections for employees. These are the Code on Wages, Code on Social Security, Industrial Relations Code, and Occupational Safety, Health and Working Conditions Code. Together, they standardize wages, social security benefits, workplace safety, and industrial relations across the country.
India’s four Labour Codes are the Code on Wages, Social Security Code, Industrial Relations Code, and OSH Code. They apply to new hires from the official implementation date notified by the Central and State Governments.
Yes. The Labour Codes apply to startups and MSMEs if they meet the prescribed employee thresholds, with simplified and digital compliance processes to reduce the burden on smaller businesses.
The new Labour Codes affect how employee salaries are structured. Allowances are likely to be capped at 50% of total remuneration, which means a higher portion of CTC will fall under basic wages. This can increase employer contributions toward PF, gratuity, and ESIC. While take-home salary may slightly reduce, employees benefit from stronger long-term social security and retirement savings.
The law does not directly mandate that basic salary must be 50% of CTC. However, it states that allowances cannot exceed 50% of total remuneration. If they do, the excess amount is treated as wages. To stay compliant and avoid disputes, most organizations are restructuring salaries so that basic pay and DA together form about 50% of CTC.
As of 2025, there is no change in the gratuity calculation formula. Gratuity continues to be payable after five years of continuous service, calculated as
(Last drawn Basic + DA × 15 × Years of service) / 26,
with a maximum limit of ₹20 lakh. Under the new Labour Codes, gratuity coverage is expected to extend to fixed-term employees, once the code is fully implemented.
