New Delhi: The Ministry of Labour & Employment has reassured employees that their take-home salary will not decrease under the new Labour Codes, easing widespread concerns. In a fresh clarification, the ministry explained that there will be no impact on take-home pay as long as PF deductions are calculated on the statutory wage ceiling.
The Labour Ministry clarified on X (formerly Twitter) that employees’ take-home pay will not be affected under the new Labour Codes. “The new Labour Codes do not reduce take-home pay if PF deduction is on the statutory wage ceiling. PF deductions remain based on the wage ceiling of Rs 15,000, and contributions beyond this limit are voluntary, not mandatory,” the ministry stated.
No Change in PF for Most Employees Under the New Rules
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Employees who currently contribute Rs 1,800 to PF, which is 12 per cent of the Rs 15,000 statutory wage limit will notice no change in their take-home salary. For those whose basic salary is below Rs 15,000, PF deductions may rise slightly if their basic pay increases, but only up to the Rs 15,000 ceiling. Any PF contribution beyond this limit is completely optional and not mandatory under the new Labour Codes.
How PF Works Under the New Labour Codes: A Simple Example
Here’s an easy breakdown to show how your PF deduction remains unchanged even after the new Labour Codes. Suppose your total monthly salary is Rs 60,000, with Rs 20,000 as Basic + DA and Rs 40,000 as allowances.
Before the Labour Codes, PF was calculated on the statutory wage ceiling of Rs 15,000. That meant the employer and employee each contributed Rs 1,800, and the take-home salary stayed at Rs 56,400.
After the Labour Codes, because allowances exceed 50 per cent of the salary, Rs 10,000 is added back to wages only for calculation purposes — making the notional wage Rs 30,000. However, PF is still calculated on Rs 15,000, as per the statutory limit. So both employer and employee continue contributing Rs 1,800 each, keeping the take-home salary unchanged at Rs 56,400.
