Do not worry! Your salary structure does NOT change from April 1st

There are many reports circulating that your pay structure may change from April 1, affecting your take home pay and pension benefits. While such a change is under discussion and was to be implemented from the 2021-22 financial year, the final notification from the government has yet to make its way.

In particular, the government has introduced four labor codes – Wage Code, Industrial Relations Code, Social Security Code, and Occupational Safety, Health and Working Conditions Code – to simplify and bring transparency in labor laws. These four codes will consolidate 29 existing legislations.

While the four codes have been adopted by Parliament and approved by the President, the rules have yet to be notified. Unless these codes come into effect, no changes in the salary structure are expected.

“The four bills became law after the president’s approval, but the effective date of the law has not yet been notified. The central government shared the rules for public comments ago about three months, but they have not yet notified The state-level rules have also not been announced, only five or six states have so far,” says Sudhakar Sethuraman, Partner, Deloitte India .


Sethuraman says that although there has been no official announcement of the schedule, we can expect from June or July this year. “The government has been very vocal and clear that it will soon implement labor laws. In fact, during her budget speech, Finance Minister Nirmala Sitharaman made reference to labor codes. I assume the notification will come on June 1 or July 1 after the national elections are over.”


Salary-related changes are what should be of most concern to you. From now on, 20-40% of your CTC is the base salary. Once the codes are implemented, your base salary will be 50% of your CTC. Under no circumstances will the cumulative allowances (HRA, travel, transport and special allowances, etc.) be higher than the base salary. Any excess amount will be submerged in the base salary.

If your base salary increases, all salary components linked to your base salary such as the EPF and NPS contribution and gratuity will be increased. If a higher contribution will go into EPF and gratuity, your net salary will decrease.

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William M. Mayer