Since the notification of the new labour codes in November, many employees have been concerned that their take-home salary could drop if basic pay rises
to 50 per cent of CTC and allowances are reduced. However, the Labour Ministry has now clarified that for most employees, there will be no reduction in net salary despite higher EPF deductions. “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 Labour Ministry stated on X (formerly Twitter). Employees whose monthly PF contribution is Rs 1,800, calculated as 12 per cent of Rs 15,000, will see no change in take-home pay. For those earning a basic salary below Rs 15,000, any increase in PF deduction due to a rise in basic salary will only apply until the statutory ceiling of Rs 15,000. Beyond this, higher deductions are optional and not legally required under the new law. Ministry Example Demonstrates Take-Home Stability To illustrate, the Labour Ministry provided an example of an employee earning Rs 60,000 per month (Rs 20,000 basic + DA and Rs 40,000 allowances). Under both the old and new codes, with a PF contribution of Rs 1,800, the take-home salary remains Rs 56,400. The ministry stressed that contributions above the statutory ceiling are voluntary and require mutual consent between employer and employee. Factors That Could Affect Net Salary Even though the PF clarification ensures take-home pay stability for most employees, other elements may reduce net salary. Higher revised basic pay could trigger larger deductions for gratuity, and encashment of leaves during employment may also impact the final amount received. Employees should review these components to understand the complete picture of their take-home pay.
