The new labour laws limit the maximum basic pay to 50 per cent of CTC, thus effectively increasing the Gratuity bonus to be paid to the employee. Under the new wages code, the gratuity amount will be calculated on a larger salary base, which will include basic pay plus allowances such as a special allowance on wages.

New Codes on labour Instustrial relations:

The four new codes on industrial relations, wages, social security and occupational health safety (OSH), and working conditions will rationalise 44 central labour laws, the government has said. According to reports, all the four codes will be implemented at one go.

The existing provisions of the new rules will lead to an increase in working hours for employees from nine to 12 hours, while the in-hand salary will also see a change. Under the new wage code, allowances have been capped at 50 per cent, which will lead to half of the monthly pay being calculated as basic wage. Provident fund (PF) contribution is calculated as a percentage of basic wage, which includes basic pay and dearness allowance. Increase in basic pay will result in an increase in the PF contribution, which will reduce the take-home pay for workers. The PF liability for employers will also increase in many cases.