Labour Code Salary Structure Calculator
Is your pay structure within the 50% wage rule? See the wages the Codes count.
Whole payroll
One row per employee and one column per monthly pay component (Basic, DA, HRA, Conveyance, Special allowance…), plus the name or ID. Totals, deductions and employee or employer PF columns are ignored — PF is worked out from wages with the settings above.
What each column is
| Column | First value | Counts as |
|---|
By employee
| Employee | Total pay | Code wages | Employee PF | Take-home | Raise basic by |
|---|
Take-home is before income tax, professional tax and ESI. “Raise basic by” keeps total pay the same and reduces the excluded allowances by that amount.
Share of total pay
- Wages
- Exclusions (a)–(i)
- 50% limit
Effect of the Labour Code wages
“On basic + DA” is the narrow base many employers used before the Codes (basic pay, DA and retaining allowance only). Take-home is before income tax, professional tax and ESI.
How this was calculated
For general information only, not legal advice. Templates are generic starting points — have a qualified lawyer review anything you rely on.
About the Labour Code Salary Structure Calculator
India’s four Labour Codes have one definition of wages: basic pay, dearness allowance and retaining allowance, plus any other pay that is not on a list of exclusions. If the excluded items — HRA, conveyance, commission, employer PF and the rest — come to more than half of total pay, the excess is treated as wages. Enter your monthly pay components, say what each one is, and the calculator shows the wages the Codes count, whether the structure is within the 50% limit, and the basic pay that would bring it within the rule.
Because provident fund, gratuity and statutory bonus are all worked out on wages, it compares each of them — and take-home pay and the employer’s cost — on basic + DA alone and on the Labour Code wages.
How to use it
- Enter each monthly pay component and its amount, or edit the example structure.
- Choose what each component is: wages (basic, DA, retaining allowance or other pay that is not excluded), one of the exclusions (a) to (i), or a gratuity or retirement benefit, which is outside the test.
- Choose how PF is worked out — on wages up to ₹25,000 a month, on full wages, or not at all — and whether the employer’s PF counts in the 50% test.
- Optionally switch on statutory bonus and check its limits.
- Read the wages under the Codes, the effect on PF, gratuity and take-home, and the suggested basic pay. Copy summary or Download CSV.
- To check everyone at once, choose Whole payroll (CSV or Excel), pick your payroll sheet, check what each column is, and download the before-and-after report.
Examples
Exclusions with employer PF: ₹25,745 of ₹45,745 (56.3%) ₹2,872.50 added back → wages ₹22,872.50 PF ₹2,400 → ₹2,745 · take-home ₹40,600 → ₹40,255 To comply with the same total pay: basic ₹22,873
The special allowance is wages → wages ₹40,000 Exclusions ₹18,000 of ₹58,000 (31%) — within the limit
₹4,000 added back → wages ₹54,000 PF unchanged at ₹3,000 (₹25,000 ceiling) · gratuity per year ₹28,846.15 → ₹31,153.85
What counts as wages
The Code on Wages, 2019 (s.2(y)) and the Code on Social Security, 2020 (s.2(88)) define wages as all remuneration, including basic pay, dearness allowance and retaining allowance, but not:
- (a) statutory bonus that is not part of the terms of employment
- (b) the value of housing, light, water, medical attendance or another amenity excluded by government order
- (c) employer contributions to a pension or provident fund
- (d) conveyance allowance or the value of a travel concession
- (e) sums paid to meet special expenses of the job
- (f) house rent allowance
- (g) pay under an award or settlement
- (h) overtime allowance
- (i) commission
- (j) gratuity on termination and (k) retrenchment compensation, retirement benefits or ex gratia on termination
Anything not on the list is wages. A special allowance therefore counts as wages, and so does a bonus that is part of your contractual pay — exclusion (a) covers only statutory bonus outside the terms of employment.
The 50% rule
The first proviso says that if the payments under clauses (a) to (i) exceed one half of all remuneration (or another per cent the Central Government notifies), the amount over that half is deemed remuneration and added to wages. Gratuity and retirement benefits, (j) and (k), are outside the test.
With basic of ₹20,000 and ₹23,000 of excluded allowances, total pay is ₹43,000; half is ₹21,500, so ₹1,500 is added to wages — or ₹2,872.50 when the employer’s ₹2,745 PF contribution, itself exclusion (c), is counted too.
What changes when wages go up
- Provident fund: 12% from the employee and 12% from the employer, on wages up to the EPF wage ceiling of ₹25,000 a month (or on full wages if your employer contributes on them). Above the ceiling, higher wages do not change PF.
- Gratuity: 15 days’ wages for each year of service, worked out as monthly wages ÷ 26 × 15.
- Statutory bonus: at least 8.33% of wages (up to 20%) for employees whose wages are within the limit the Government notifies, worked out on wages up to a notified ceiling (Code on Wages, s.26). The calculator starts with the Payment of Bonus Act, 1965 figures — ₹21,000 and ₹7,000 — which you can change.
- Take-home pay falls by the extra employee PF; the employer’s cost rises by the extra employer PF, gratuity provision and bonus.
Check a whole payroll
Choose Whole payroll (CSV or Excel) and a sheet with one row per employee and one column per monthly pay component. The tool guesses what each column is from its name — Basic, DA, HRA, Conveyance, LTA, Special allowance, Overtime, Commission — and ignores totals, deductions and PF columns (PF is worked out from wages with your settings, so it is never counted twice). Change any guess in the What each column is table. For every employee you get the Labour Code wages, the amount added back, the change in employee PF and take-home pay, and the basic pay that would comply with the same total pay; the totals show the change in the employer’s yearly cost. Download it all as CSV.
Employer PF in the 50% test
Exclusion (c) — the employer’s PF and pension contributions — is one of clauses (a) to (i), so it counts towards the half. It also depends on the wages it helps to set, so the calculator solves for it: it works out PF on the wages, re-runs the test with that PF, and repeats until the rupee amount stops changing. Untick Count employer PF in the 50% test to see the result without it.
Limitations
- Remuneration in kind is not modelled: up to 15% of total wages paid in kind is treated as wages (Explanation to the definition).
- For equal wages and the payment of wages, conveyance, HRA, award pay and overtime are counted as wages (second proviso) — this calculator applies the definition as it is used for PF, gratuity and bonus.
- The 50% limit, the PF ceiling and the bonus limits come from the Codes and government notifications, which can change. Rules may also add detail.
- Employee PF is assumed at 12%; ESI, professional tax and income tax are not worked out. The EPF calculator shows the EPS split.
- An estimate for planning, not legal advice. Have payroll changes reviewed by a professional.
Privacy
Everything happens in your browser. What you enter or open here is not uploaded or stored by MySmartCoPilot.
Frequently asked questions
What is the 50% wage rule in the Labour Codes?
If the allowances and payments excluded from wages — clauses (a) to (i), such as HRA, conveyance, overtime, commission and employer PF — are more than half of total pay, the excess is counted as wages. So wages under the Codes are never less than half of total pay, leaving gratuity and retirement benefits aside.
Is HRA part of wages?
No. House rent allowance is exclusion (f), so it is not wages — but it counts towards the excluded half of pay in the 50% test.
Is a special allowance part of wages?
Yes, unless it is really one of the excluded items. Wages are all remuneration except the listed exclusions, and “special allowance” is not on the list.
Will my take-home pay go down?
Only if your PF goes up. If PF is worked out on wages up to ₹25,000 and your wages are already above that, PF stays at ₹3,000 and take-home is unchanged. Otherwise your own PF rises by 12% of the extra wages.
Can I check my whole payroll at once?
Yes. Choose Whole payroll (CSV or Excel), pick the payroll sheet, confirm what each column is, and download a report with every employee’s Code wages, PF, take-home and the change in employer cost.
Does the employer’s PF count in the 50%?
Employer contributions to a pension or provident fund are exclusion (c), which is one of clauses (a) to (i), so the calculator counts them by default. You can leave them out with the checkbox.
Are the Labour Codes in force?
Yes. The Government brought the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020 into force together. It also said that during the transition the relevant provisions of the earlier labour Acts, with their rules, notifications and schemes, continue in force.