Labour code impact: Rs 8k less pay likely on 15L CTC
The new labour code enacted last year has introduced a rule where wages must account for 50% of an employee's total Cost to Company (CTC) when calculating Provident Fund (PF), bonus, and gratuity upon retirement. However, this 50% rule excludes certain components such as House Rent Allowance (HRA), gratuity payable on termination, retrenchment compensation, and a few others.
If these exclusions surpass 50% of the total salary, the amount exceeding 50% is considered part of wages. This change in the definition of wages could impact employees' monthly net take-home salary.
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