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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Wage Code has not been implemented in Karnataka, If notification is issued, please share us a copy.

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Karnataka state yet to issue on 50% basic salary implantation notification. If notification is issued, please share us a copy.

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States have not released the Implementation Notification. Everyone is awaiting for the same but delayed due to 2nd Covid wave

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Can you please confirm if the wages act is implemented in Maharastra? Or the circular for implementation is yet to come

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Hi Shefali,

As of now, Wage of code and salary restructuring accordingly is on hold and there is no GO notification.

Other I request to share your thoughts on the same.

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Hello Everyone,
As for now the new wage code is not implemented yet, can anyone suggest what part of gross salary should be calculated as basic salary as per Hayana Government.

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Hi @Ritika

As per the central notification, basic should be 50% of gross.

Example: we have components like.

BASIC -
HRA -
City Compensatory -
Professional Allowance -
Special Allowance-

Earlier basic can be even 30% or less in order to ensure other components get more values while dividing CTC.

But now it’s like 50% of all components to be made as Basic for example.

We will have to wait for states to tell which all such components will come up in Gross (basically definition of gross). but due to pandemic there is a delay.

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Dear Dinesh,
Thanks for the update.

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Hello Dinesh,
Can you please share detailed salary structure calculation as per new wage code, taking Salary as 80000/month & 25000/month (State-Haryana)

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Hi @Ritika

Sure, as of now only Minimum wage rules are applicable in Haryana, until and unless we have this wage code draft published by Govt and take into action.

Until then I can share a sample with you:

Hope this helps :slight_smile:

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