Labour Codes · in force since 21 November 2025
50% wage rule calculator
Check whether a salary structure passes the Labour Codes' 50% wage rule, and what it does to PF, take-home pay and gratuity.
Check a salary structure
Monthly salary structure
Excluded allowances: 67% of total pay of ₹60,000
Wages become ₹30,000
₹10,000 of allowances count as wages, because they are more than half of total pay.
| Per employee | On basic + DA | Under the Codes |
|---|---|---|
| Wages | ₹20,000 | ₹30,000 |
| Employee PF a month (12%, up to ₹25,000) | ₹2,400 | ₹3,000 |
| Gratuity after 10 years | ₹1,15,385 | ₹1,73,077 |
- Take-home: −₹600 a month (more employee PF, which goes into their PF account).
- Extra employer PF, EDLI and admin for 1 person: ₹650 a month, ₹7,800 a year.
- Extra gratuity liability for 1 person: ₹57,692.
- To pass the rule, basic + DA would need to be at least ₹30,000 a month within the same total pay.
Email me this report
The result above, by email, to share with your finance team or CA.
What employers need to do
- List your salary structures and check each one against the 50% rule.
- Decide with your CA how to treat special allowance.
- Either raise basic + DA to half of total pay, or use the higher wages for PF and gratuity.
- Budget for the higher gratuity liability, including fixed-term staff, who now qualify after one year. Try the gratuity calculator.
- Check PF on the new ₹25,000 ceiling with the PF ceiling calculator.
Payroll that keeps up with the rules
Vijaya Rise applies the Labour Codes and the ₹25,000 PF ceiling, and works out PF, ESI, professional tax, labour welfare fund and TDS for every employee. Free for up to 10 employees.
Free for up to 10 employees · No card needed
Common questions
What is the 50% wage rule?
Under the Labour Codes, in force since 21 November 2025, "wages" are basic pay, dearness allowance and retaining allowance. Certain parts of pay are excluded, such as HRA, conveyance, bonus and overtime. If the excluded parts add up to more than half of total pay, the extra amount is added back to wages.
What does it change?
Wages are used for gratuity and, below the ₹25,000 ceiling, for PF. A structure with a low basic and large allowances ends up with higher PF contributions and a bigger gratuity liability.
Does total pay or CTC change?
No. The rule changes how much of the same pay counts as wages. Take-home pay can fall slightly where employee PF goes up, and the employer's PF and gratuity cost rises.
Is special allowance excluded?
It is not in the Code's list of exclusions, so many companies treat it as wages to be safe. Others treat it as an allowance. The checker lets you try both; ask your CA which applies to you.
How do I fix a structure that fails?
Raise basic plus DA to at least half of total pay within the same total, or accept the higher wages for PF and gratuity. The checker shows the basic needed. Re-issue revised salary structures to employees.
Does Vijaya Rise payroll apply this rule?
Yes. Vijaya Rise applies the Labour Codes and the ₹25,000 PF ceiling, and works out PF, ESI, professional tax, labour welfare fund and TDS for every employee.
Based on the Code on Wages 2019 and the Code on Social Security 2020. General information, not legal advice: confirm details for your company with your CA.