India's four Labour Codes — Code on Wages, Industrial Relations Code, Code on Social Security, and OSH Code — took effect from November 21, 2025, replacing 29 central labour laws. Here's what actually changes on your payslip.
The single biggest change: Basic + Dearness Allowance must now be at least 50% of an employee's total remuneration (CTC). Many employers historically kept Basic around 30-40% of CTC to hold down PF/gratuity cost — that structure is no longer compliant. If Basic+DA falls short, the shortfall is added back for the purpose of calculating PF, gratuity and other statutory dues, even if it isn't actually paid as Basic.
PF is calculated on Basic + DA, capped at the ₹15,000/month statutory wage ceiling (unchanged in 2026). A higher enforced Basic pushes more salaries up against — or over — that ceiling, meaning slightly lower take-home pay but a larger PF corpus. Run your own numbers on our EPF Calculator or see the full effect on take-home in the In-Hand Salary Calculator.
Gratuity is paid on (Basic + DA) ÷ 26 × 15 × years of service — so a higher mandated Basic directly raises gratuity liability for every employee, not just at exit. Fixed-term contract employees are also now gratuity-eligible after just 1 year of service, down from 5 years. Estimate the new liability with our Gratuity Calculator.
ESI eligibility still runs on gross wages (≤ ₹21,000/month = covered), and the contribution rates (0.75% employee / 3.25% employer) are unchanged for 2026. But ESI wage is now the higher of (Basic + DA) or 50% of CTC — same floor logic as PF. Check applicability with the ESIC Calculator.
Run a full CTC restructure on our CTC Calculator, or see how the four Codes apply to your establishment on the Labour Code Applicability Checker.
