Wage Redefined, Pay Reduced
Outlook Money|April 2021
Introduction of the new wage code from April 1 is likely to affect take-home salary for employees across public and private sectors but ensure a better retirement package
Vishav
Wage Redefined, Pay Reduced

When all things normal don a new look, why won’t the good-old systems of basic personal finance do the same?

With the unfolding of the new financial year, the very technical definition of ‘wages’ gets a new look and form in sync with the restructured labour laws. The new Wage Code Act comes into effect on April 1. Passed in Parliament in 2019, it aims to rationalise dozens of central labour laws and unify them into a single code.

The legislation will also directly impact the salary structure of private sector employees and their take-home pay. Before we go into how your salary may be affected, let’s find out what wages mean according to the new code.

The Code on Wages, 2019 says that wages would include all remuneration whether by way of salaries, allowances or otherwise, and basic pay, dearness allowance and retaining allowance. The code specifically excludes from the definition of wages components like bonus, housing allowance, pension and provident fund (PF) contributions by the employer, conveyance and travel allowance, overtime allowance, gratuity, retrenchment compensation and commissions.

Under the new code, it is mandatory that the wages make up at least 50 per cent of the employee’s cost to company (CTC). All other payments, apart from basic pay, dearness allowance and retaining allowance, cannot exceed half of the total renumeration that the employee receives. And if they do exceed 50 per cent of the CTC in aggregate, which is the case for a large section of private sector employees, the extra amount by which it exceeds the threshold would be added to the wages.

This story is from the {{IssueName}} edition of {{MagazineName}}.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

This story is from the {{IssueName}} edition of {{MagazineName}}.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

MORE STORIES FROM OUTLOOK MONEYView all
Gold ETFs And FoFs
Outlook Money

Gold ETFs And FoFs

While Indians love to invest in physical gold, even mutual funds offer the option, but in paper format.

time-read
2 mins  |
November 2024
PLANNING TO BUY CHILD INSURANCE? THINK TWICE
Outlook Money

PLANNING TO BUY CHILD INSURANCE? THINK TWICE

Child insurance plans combine insurance and investment but often offer low returns due to high costs, making a combination of a term insurance cover and mutual fund a better option for securing your child’s higher education needs

time-read
7 mins  |
November 2024
How Do You Define Happiness?
Outlook Money

How Do You Define Happiness?

Money does buy happiness, but after a while, the appeal fades. We talk about our relationship with money, but, maybe, it’s time to revisit our relationship with happiness

time-read
5 mins  |
November 2024
Avoid Crypto As It Is Highly Volatile
Outlook Money

Avoid Crypto As It Is Highly Volatile

I am 22 years old and have recently started working. I want to invest a small portion of money in cryptocurrency. How should I go about it? Does it require a huge capital investment?

time-read
2 mins  |
November 2024
Invest Right, Don't Speculate
Outlook Money

Invest Right, Don't Speculate

The lure of high returns and quick gains from equity tips, cryptocurencies, and equity F&O can be enticing. But remember, return of capital is more important than return on capital

time-read
4 mins  |
November 2024
The Wedding & Budget: Is Minimalist Trend The Right Knot For You?
Outlook Money

The Wedding & Budget: Is Minimalist Trend The Right Knot For You?

Indian weddings are known for their pomp and grandeur, but minimalist weddings are also in vogue now. Dia Mirza was one such celebrity who went for a minimalist wedding. If you also want to keep things minimal on your big day, here’s how to do it

time-read
9 mins  |
November 2024
Here's How To Buy An ETF?
Outlook Money

Here's How To Buy An ETF?

Mutual funds are the preferred choice for retail investors. However, they come at a cost and fund management risk, apart from other risks. A smarter alternative is to invest through ETFs.

time-read
1 min  |
November 2024
How Passive Funds Help Diversify
Outlook Money

How Passive Funds Help Diversify

Passive funds provide a simple way to invest in broad markets as well as in specific themes and sectors, making them ideal for an investor's satellite portfolio

time-read
2 mins  |
November 2024
The Rise Of Passive Funds
Outlook Money

The Rise Of Passive Funds

The popularity of passive funds among retail investors has risen post Covid, and fund houses are out with many variations of ETFs and index funds. Does this category present a new opportunity for investors?

time-read
10 mins  |
November 2024
Tax Reforms: What's In Store?
Outlook Money

Tax Reforms: What's In Store?

The government is working on reforming the existing Income-tax Act, 1961. The impending reforms have raised many questions in the minds of taxpayers. Will the old regime and deductions be done away with? Will it really simplify your life? What's the need for these reforms? We try to answer these and other questions regarding tax reforms

time-read
10+ mins  |
October 2024