New Wage Code 2022 in India was birthed out of the amendments made in the 2021 Union Budget constituting 29 labour compliances. 4 new codes about Industrial relations, occupational safety, Health & Working Conditions, and New Wage Code are widely spoken about and noted that they are acting as braced crowns by industries and companies across the nation. Multiple changes did impact on HR process and compliance services hence the organizations are seeking support from the consultants for deploying the new labor code. Redefinition to the term “wages” is done in this new wage code 2022 and a good many changes can be seen which need a clear walk-through for every organization.

New wage code 2022- Implications and Impact

This new era of labour compliance in India augments simplified digitalized compliance services ensuring social security for the laborers. Yet the discourse by and with the companies states 28% of firms consider these wage reforms as challenging and 26% of companies struggle to know- how the implementation of the same is as per the new labor code. Owing to this, we derive that 18.6% of the companies are yet to consider and initiate the execution and 67% rather choose to deploy the new wage code 2022 in a phased process.

The undercurrent understanding of the codes is their impact on the employees’ professional lifecycle. It is a sure-shot takeaway that the benefits are appreciable yet it slams the doors of fringe benefits and regulated working hours meaning the downscale of your salary take away and raised working hours to 12 hours a day.

How about knowing the occurrence of the New Labor Code 2022?


EPF and EPS contribution might elevate if the wage ceiling is expected to rise from Rs 15000 to Rs 21000 eventually leading to the hike from Rs 1250 to Rs 1749.

Restructured CTC

Organizations are expected to revisit the CTC so that the employee’s basic pay shall be 50% of the gross salary which is the cost-to-company and the rest 50% shall constitute allowances and other payments. This certainly loads higher in the gratuity amount of the employees as gratuity calculation is based on 15 days of basic pay of an employee per month.

Working Hours

This is set to be an alarm for the employees as well as employers because the new wage code might enforce the 12 hours of work a day concept and grant long weekends. The concept is on discussion note to collate the pros and cons of it.

Revised Gratuity Rule

The older rule of Gratuity eligibility ensures the entitlement for the employee who is associated with the company for not less than 5 years inclusive of Basic Pay and allowances like HRA, PF, etc. The newer code says the entitlement is granted for a one-year-old contract employee and 5 years norms remain the same for the regular staff.

Leave Grants

Expecting the unexpected is what we understand when we note the leave grants. The following might apply to the new hires if this wage code gets into full swing implication.

Wage code 2021 New Wage Code 2022
Annual working days = 240 Annual working days = 180
Monthly Working Days = 20 Monthly Working Days = 20
Leave eligible = 1 day of leave Leave eligible = 1 day of leave

TDS becomes less tedious… For whom?

The known scenario is high salary implies high taxation, but the new wage code says the newer percentage of basic pay in CTC limits the tax slab and eases the employees in the low and medium salary bandwidth. However, it is a burden for the high-pay receivers affecting HRA benefits but excluding Bonuses. Your Payroll Processing is quoted here

Swift Settlement- F&F

Any kind of employee walking off from the organization like resignation, layoff, dismissal or removal, or settlement of their finances should not be beyond 2 days from the happening of anything so.

Impacting International Associations

Businesses in existence and businesses prospects aspiring to collaborate with Indian Market do have adds-on regulations in the payroll which can be guided by the national consultants

Labour compliance checklist for the Employers… retrospective or prospective note?

  1. If the above said gratuity rule gets deployed then the employers have to revisit their CTC to revise the basic pay norms to reduce the financial encumbrance
  2. Companies can also check out the revisions in welfare and other benefits without hindering the regular welfare being received. But to be mentioned this is like a double-edged sword as you are in a stake to not give up your employees and also enable smooth financial proceedings
  3. The companies have to look into the taxation slab of every staff and fix the compensation structure
  4. The dues settlement process about the employee’s resignation or dismissal requires a prompt and legal fit system to avoid any further claims from their ends
  5. New wage code deployment for the international business to be noted for the devoid of penalties in case of non-adherence to labour compliances owing to its understanding

Payroll experts say that codes favor the employers but the intricacies involved have to be taken forward with the consultant augmentation

Employers or Employees Codes?

Looking at the Compliance checklist for companies, make us all figure out as for whom these codes are promising.  Take-home is the ultimate discussion of this new labor code which makes the employee’s financial management challenging yet, another dimension of the investment aspect disapproves their thoughts. This becomes a formidable task for employers to streamline laws, practices, and policies of their organizations through the New Labor Code 2022.

Have to revisit and restructure the compensation, tax obligations constituting ESI, PF, Gratuities, and other associated welfare benefits and not ignore the paperwork involved. Nevertheless, companies choose to opt for this labor code for the privilege of changing the CTC mutually not affecting either employees or the management. This is the only solace point for the employers yet they got to cover the expenses incurred out of this new wage code 2022 which can be mitigated with proactive aid called planning and budgeting. Aon Research says pan India 30 industries have internalized the new wage code 2022.



Revisions have been made to Wage Code 2021 and New wage code 2022 in India promise the employees and employers the following codes in the organized and unorganized sectors;
· The Code on Wages 2019
· The Code on Social Security 2020
· Occupational Safety, Health and Working Conditions Code 2020, and
· The Industrial Relations Code 2020

Maintaining and holding the government standards and protocols assure the devoid of penalties, process ambiguities and build trust among the working community. Adherence to labour compliances and checklists can bench the company’s goodwill by promoting transparency and governance procedures amongst the investors of your business. Above all, you are ensuring risk-free business and investment options by meeting compliance requirements.

1. You are publicizing your fair treatment policy for the employees though it is a financial encumbrance
2. Risky free business from law pursuits and statutory compliance sets a clear business route
3. You are promoting your work culture and economic pattern to your competitors and observers
4. Setting your business operations and daily routine in an established method for seamless functioning

Benefits encompass Industrial relations, occupational safety, Health & Working Conditions, and New Wage Code. The widest-spoken benefits of this New wage code in India are
Minimum wage assurance of Rs 15000
Gratuity claim period – One-year service completion for the contract laborers
Reduced Annual Working days for leave eligibility
Less tax burden for the medium and low-income holders