New Labour Code Salary Calculator
Check the 50% wage rule, PF and gratuity impact
See how the Code on Wages changes your salary structure: wages vs excluded allowances, the 50% add-back rule, and the impact on PF, gratuity and take-home pay.
Code on Wages, 2019 — 50% wage rule
Monthly salary components
Good to know
- "Wages" under the Code on Wages means basic pay, dearness allowance and retaining allowance.
- HRA, conveyance, statutory bonus, overtime, commission and employer PF contributions are excluded — but if excluded pay exceeds 50% of total remuneration, the excess is added back to wages.
- Special allowance is not in the list of exclusions, so many advisors treat it as wages. Choose "Excluded" only if your legal advice says otherwise.
- Higher wages raise the base for PF (unless capped at the wage ceiling) and for gratuity.
Results (monthly)
Wages under the labour code
₹32,000
64% of total pay of ₹50,000
Estimate only. Employer PF is shown equal to employee PF (12%); EPS/EDLI splits, ESI and state rules are not modelled. Gratuity accrual uses 15 days' wages per year on a 26-day month. How individual allowances are classified depends on their nature and your legal advice — confirm with your payroll advisor before restructuring salaries.
How this calculator works
Under the Code on Wages, 2019, "wages" means basic pay, dearness allowance and retaining allowance. Components such as HRA, conveyance, statutory bonus, overtime, commission and employer PF contributions are excluded — but if those excluded components add up to more than 50% of total remuneration, the excess is treated as wages. This calculator splits your monthly salary into wages and excluded components, applies the 50% rule, and shows how the higher wage base changes employee and employer PF and the monthly gratuity accrual compared with a structure where only basic + DA counted.
New Labour Code Salary Calculator formula
Wages = Basic + DA + Retaining allowance. If excluded pay (HRA, conveyance, bonus, overtime, commission) is more than 50% of total pay, the excess is added to wages.
Worked example
Total pay is ₹50,000: Basic ₹20,000, HRA ₹10,000, conveyance ₹3,000, special allowance ₹12,000 (treated as excluded) and ₹5,000 bonus/overtime.
- Excluded pay = ₹10,000 + ₹3,000 + ₹12,000 + ₹5,000 = ₹30,000, which is 60% of total pay
- Allowed exclusion = 50% × ₹50,000 = ₹25,000
- Add-back = ₹30,000 − ₹25,000 = ₹5,000
- Wages = ₹20,000 + ₹5,000 = ₹25,000
- Employee PF rises from 12% × ₹20,000 = ₹2,400 to 12% × ₹25,000 = ₹3,000
Wages under the code are ₹25,000. Take-home falls by ₹600 a month while PF and gratuity savings rise.
New Labour Code Salary Calculator: FAQs
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