Labour Law Consultancy
The New Definition of 'Wages' Under the Labour Codes
2025-12-07 · 7 min
The Codes adopt a single definition of 'wages' that affects PF, gratuity and bonus liability. Restructuring CTC is on every CHRO's agenda.
The 50% rule
Excluded allowances cannot exceed 50% of total remuneration; the excess becomes 'wages'.
Impact on PF and gratuity
Higher PF wages mean higher employer cost; gratuity provisions also rise.
Implementation strategy
Model multiple structures, communicate transparently and align CTC bands before notification.
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