The labour ministry has moved to calm widespread considerations amongst salaried staff, stating that the new Labour Codes don’t cut back take-home pay, as long as provident fund (PF) deductions proceed to be calculated on the statutory wage ceiling of ₹15,000.
In a put up on X, the ministry mentioned: “The brand new Labour Codes don’t cut back take-home pay if PF deduction is on statutory wage ceiling. PF deductions stay primarily based on the wage ceiling of ₹15,000 and contributions past this restrict are voluntary, not obligatory.”
Ever because the Codes had been notified on November 21, 2025, many workers feared a drop in in-hand wage. The nervousness stemmed from the brand new rule mandating that primary pay and associated parts should make up a minimum of 50% of complete wages. Many assumed this could robotically enhance PF contributions and cut back take-home earnings.
No automated discount in wage
The ministry clarified on Wednesday that this conclusion is inaccurate. The important thing lies in how PF is definitely calculated.
Even when an worker’s primary pay will increase underneath the brand new wage definition, PF continues to be computed on the statutory ceiling of ₹15,000, except each employer and worker voluntarily go for a better contribution base.
Which means for the overwhelming majority of salaried staff, whose PF is capped on the ceiling, month-to-month deductions stay unchanged.
The maths behind it
To drive the purpose house, the ministry issued an illustration.
For an worker incomes ₹60,000 a month, with
- Fundamental + DA = ₹20,000
- Allowances = ₹40,000
– PF continues to be deducted on ₹15,000, not on the total primary pay.
PF contribution (earlier than and after codes):
- Employer: ₹1,800
- Worker: ₹1,800
Take-home wage stays: ₹56,400
The brand new codes do require allowances to be capped at 50 per cent of complete wages. In instances the place allowances exceed this restrict, the surplus have to be added again to “wages” for statutory calculations. However even then, PF stays linked to the ₹15,000 ceiling, except voluntarily raised.
Intent is transparency, not a pay reduce
The ministry emphasised that the revised wage construction goals to deliver uniformity and readability throughout organisations, to not cut back salaries.
Beneath the brand new framework, the one scenario the place take-home pay might fall is that if an worker and employer collectively resolve to compute PF contributions on a wage increased than ₹15,000. That is non-obligatory, not mandated.
Officers added that workers mustn’t anticipate their month-to-month earnings to alter robotically simply because the codes are taking impact.
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