The new Labour Code 2025, which came into effect recently, mandates that wages must be calculated as 50% of the total CTC for computing gratuity, pension and other social security benefits.

In a press release dated November 21, 2025, the government stated: “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."

While the reforms span compliance, contracts and social security, the most visible and immediate impact is on salary structures and monthly take-home pay for nearly all salaried employees.

Why Salary Structures and Take-Home Pay Will Change

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