{"id":3968,"date":"2020-12-11T14:57:38","date_gmt":"2020-12-11T09:27:38","guid":{"rendered":"https:\/\/razorpay.com\/learn\/?p=3968"},"modified":"2023-04-24T22:57:35","modified_gmt":"2023-04-24T17:27:35","slug":"new-wage-rules-employee-salary-wage-code-2019","status":"publish","type":"post","link":"https:\/\/razorpay.com\/payroll\/learn\/new-wage-rules-employee-salary-wage-code-2019\/","title":{"rendered":"New Wage Rules: Employee Take-Home Salary Might Reduce"},"content":{"rendered":"<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">On 9th December 2020, the Government of India released new wage rules (draft version) of the Code on Wages 2019.<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">The Code on Wages Bill 2019, which was passed by the parliament last year, is likely to come into force from 1st of April 2021. The Government will notify the final rules after considering public feedback.\u00a0<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e7aaa67afd7\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e7aaa67afd7\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/payroll\/learn\/new-wage-rules-employee-salary-wage-code-2019\/#What-to-expect-from-the-new-wage-rules\" >What to expect from the new wage rules<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/payroll\/learn\/new-wage-rules-employee-salary-wage-code-2019\/#Current-scenario-of-the-wage-structure-in-India\" >Current scenario of the wage structure in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/payroll\/learn\/new-wage-rules-employee-salary-wage-code-2019\/#Benefit-of-new-wage-rules-to-employees\" >Benefit of new wage rules to employees<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/payroll\/learn\/new-wage-rules-employee-salary-wage-code-2019\/#How-the-new-wage-rules-impact-businesses\" >How the new wage rules impact businesses\u00a0<\/a><\/li><\/ul><\/nav><\/div>\n<h2 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"What-to-expect-from-the-new-wage-rules\"><\/span><span style=\"font-weight: 400;\">What to expect from the new wage rules<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">According to the draft of new wage rules, employee wages for calculation of gratuity and provident fund (PF) contributions will be <\/span><b>at least 50% of their gross pay<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<blockquote data-read-aloud-multi-block=\"true\">\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">To simplify, the basic salary will be 50% of the total employee compensation. The allowances part of the total cost to company (CTC) will not exceed 50% of the CTC.\u00a0<\/span><\/p>\n<\/blockquote>\n<h2 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"Current-scenario-of-the-wage-structure-in-India\"><\/span><span style=\"font-weight: 400;\">Current scenario of the wage structure in India<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Currently, most companies in India allocate a higher portion of CTC for allowances and a lower amount to non-allowances, i.e. Basic Pay.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Employers will have to restructure their employee CTC to align with the new wage rules once the Government enforces the Code on Wages 2019.\u00a0<\/span><\/p>\n<h2 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"Benefit-of-new-wage-rules-to-employees\"><\/span><span style=\"font-weight: 400;\">Benefit of new wage rules to employees<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Since the <a href=\"https:\/\/razorpay.com\/learn\/employee-provident-fund-epf-scheme\/\" target=\"_blank\" rel=\"noopener noreferrer\">PF contributions<\/a> are calculated using fixed components, changes to the Basic Pay will affect the take-home pay of employees\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">The new measures will enhance social security and retirement benefits for the salaried individuals in India. But, a higher allocation to the retirement plan will reduce employee take-home pay proportionately.\u00a0<\/span><\/p>\n<h2 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"How-the-new-wage-rules-impact-businesses\"><\/span><span style=\"font-weight: 400;\">How the new wage rules impact businesses\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Employers will also experience the effect of new wage rules. Their PF contributions and gratuity will increase in proportion to the rise in their employees\u2019 contributions.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Also, they might struggle to restructure the employee CTC because of the complexities of the new rules.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">We at Razorpay, already have a solution &#8211; RazorpayX Payroll.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Our <a href=\"https:\/\/razorpay.com\/payroll\/\">automated payroll software RazorpayX Payroll<\/a> is updated with all the tax and labour laws amendments. Employers do not have to worry about decoding new wage rules and making changes to employee salaries.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">The software will update employers about implementation of the Code on Wages Bill 2019 as soon as the Government announces it. After that, they will be able to restructure salaries for all employees in a single click.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Automate your payroll &amp; compliance with RazorpayX Payroll and never worry about the changing regulations.<\/span><\/p>\n<div style=\"text-align: center;\" data-speechify-sentence=\"\"><a style=\"border-radius: 3px; background: #528FF0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"http:\/\/razorpay.com\/payroll\/?r=wages\" target=\"_blank\" rel=\"noopener noreferrer\">Try RazorpayX Payroll Now<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>According to the draft of new wage rules under the Code on Wages 2019, wages for calculation of PF contributions will be at least 50% of employee total pay.<\/p>\n","protected":false},"author":151156469,"featured_media":3970,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3404],"tags":[3492],"class_list":{"0":"post-3968","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-payroll","8":"tag-new-wage-rules"},"_links":{"self":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/3968","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/users\/151156469"}],"replies":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/comments?post=3968"}],"version-history":[{"count":10,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/3968\/revisions"}],"predecessor-version":[{"id":4244,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/3968\/revisions\/4244"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media\/3970"}],"wp:attachment":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media?parent=3968"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/categories?post=3968"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/tags?post=3968"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}