The new Labour Code 2025 which came into effect on November 21, 2025, requires every employer to calculate wages as 50% of the total CTC for computing gratuity, pension and other social security benefits.

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In a press release dated November 21, 2025, the government gave: “Uniform Definition of Wages: “Wages” now include basic pay, dearness allowance, and retaining allowance; 50% of the total remuneration (or such percentage as may be notified) shall be added back to compute wages, ensuring consistency in calculating gratuity, pension, and social security benefits.”

This new definition raises the question whether bonus and leave encashment components are to be included in the definition

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