CTC Structure as per new Guidelines Wage Code 2019

[Rohin]

Hi Team,
Could you please suggest CTC structure as per new guidelines.
E.g for an employee hired on minimum wage.
For Employee hired at 50k/month, 1 lac/month

Also, do we need to change the CTC structure for that month in which the bonus is given.

Thank you

[Dinesh]

Hi @Rohin

The definition of Wages is likely to bring in changes in the current salary structure, i.e., all the allowances such as LTA, HRA, OT, Conveyance etc. have to be capped at 50% of the CTC break up. If the allowance aggregate is more than 50% of the CTC, the extra amount has to be added back to the Wage except the special allowance.

The Rules for respective Codes were expected to get rolled out w.e.f 01 April 2021. As per the recent article in print media, it is likely to delay further since except Jammu & Kashmir, no other State has framed the draft rules.

To get the Rules published, it will require 30-45 days notification to seek objections if any subsequent to which it can be published and brought to effect.

[avgol.amit.2019]

As per code of wages 2019: Covers all salary components expressed in terms of money or capable of being so expressed and includes:

• Basic pay.
• Dearness allowance.
• Retaining allowance.

Excluded:

• Bonus payable under any law
• Conveyance allowance
• House rent allowance
• Overtime allowance
• Commission
• Light, water, medical attendance
• Value of travel concession
• Amenity / service excluded by general or special order of Appropriate Government
• Sum paid to defray special expenses.
• Provident fund / pension contribution.
• Remuneration payable under any award or settlement.
• Gratuity.
• Retrenchment compensation.

Limit on exclusions: 50% of total remuneration (except gratuity and retrenchment compensation).

Example:
Monthly salary of employee in INR as follows:
Basic salary: 20,000
House rent allowance: 10,000
Conveyance allowance: 8,000
Special allowance: 12,000
Total remuneration: 50,000

Applying the definition of wages:

Step 1: Cover all salary components: 50,000
Step 2: Total exclusions House rent allowance + Conveyance allowance: 18,000
Step 3: Total permissible exclusions:
50% of total remuneration : 25,000 or Step 2 : 18,000
whichever is lower: 18,000

‘Wages’ of employee for the purposes of labour codes will be INR 32,000 (50,000 less 18,000).

[pelatro]

thanks Amit

i have been told by someone that there one revised wage code has been released. but i am not finding it in website.
can any one help

[pelatro]

hi Dinesh

i am sure it will not be effective 1st apr 2021

[Dinesh]

True @pelatro looks like that for now.

[hormispo]

Is it applicable for all states?
Or state specific will it vary.
Is it optional?

Thanks
Hormis

[Habeeb]

It is applicable to all states. Not optional

[Nagarajpillai]

@avgol.amit.2019 Very useful information, thanks.

[A984SCE]

All,

Just came across this Webinar on the new Wage Code 2019, where you can register for free by following the below link.
https://hub.tie.org/e/new-labour-codes-india

Not sure if all our queries will be answered but thought of sharing the same.
Thank you
Kind Regards
Venkat

[Dinesh]

Thanks Venkat. It definitely helps.