Explained: How new wage code will impact your take-home salary

As per the new wage code, allowances given to employees should not exceed 50 per cent of the CTC. This means that the basic pay of each employee has to be at least 50 per cent of CTC.  Here is how it will impact the take-home salaries of employees:

It may not be long before the central government notifies fresh rules under the new labour codes, which will directly impact the salary structure of employees in the country. Not only will it impact the employees’ cost-to-company (CTC) but also the employers’ wage bills. As per the new wage code, allowances given to employees should not exceed 50 per cent of the CTC. This means that the basic pay of each employee has to be at least 50 per cent of CTC. While reports suggest that this may come into effect from April 2021, there has been no formal announcement regarding the new wage codes by the government. The last update came on February 8 when Labour Secretary Apurva Chandra told a media briefing that the rule-making process was underway.