Wage Code'19 - Basic 50% of Gross Salary?

Hi,
Can anyone suggest the new change in Salary Structure from the coming financial year, where Basic should be a minimum of 50% of Gross Salary?
Is this mandatory from the Labour department, if yes please share the notification.
Thanks in advance.

Ramesh

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Hi @Ramesh

According to the new wage definition under Wage Code 2019, in effect, at least 50 per cent of the gross remuneration of employees should form the basis to calculate benefits such as gratuity, retrenchment compensation and provident fund, etc in situations where the sum of basic salary and other fixed allowances (such as dearness allowance) is less than 50 per cent of the gross remuneration. Allowances cannot be more than 50 per cent of the total compensation. As a result, the basic pay (in government jobs, basic pay plus dearness allowance) will have to be 50 per cent or more of total pay from April, various media reports state.

In addition to restructuring the pay packages, it will have significant cost repercussions for firms. As the base to calculate PF and gratuity increases, employers will have to increase their workforce cost. This is in addition to a one-time cost increase for employers to audit their current base of employee pay structure and align with the new system and rising compliance cost burden.

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Dear Ramesh and Dinesh,

Thanks for the info. However, this rule to be implemented from 1st April 2021? What I know is, it is still in discussion.

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Can you recommend a consultant who can help small companies reorganise their pay structure?

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Hello Sangeeta,

I am a HR / Payroll Consultant and am associated with Greytip for several years now. Do let me know the requirements via email id vinod.gulvady@greytip.com

Regards,
Vinod.

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Dear Sagar,

We can do it

Regards,
Raghavendra

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Hi Sangeeta,

Please talk to Mr. Manjunatha and see if he can help.
Thank you

Kind Regards
Venkat

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Thanks, Venkat.

Regards,
Sangeeta

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Hi @ Sangeeta,

Can you recommend a consultant who can help small companies reorganise their pay structure?


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