New Labour Codes 2025: The biggest question among employees regarding the new labor codes was whether it would reduce their take-home salary (Take Home Salary New Labour Code). Now, the Ministry of Labour and Employment has clarified that if the PF deduction is based on the statutory wage ceiling of ₹15,000, then there will be no change in the employees' take-home salary.

According to a post released by the ministry on social media platforms, the impact of PF deduction under the old and new rules has been shown for a total package of ₹60,000 (₹20,000 Basic + DA and ₹40,000 Allowances) (Basic salary + DA 50% rule explained). According to the report, even after the implementation of the new labor code, the take-home salary will remain the same as before, at ₹56,400.

What has changed and what hasn't in the new labor code?
The ministry explained that if an employee's allowances exceed 50% of the total salary, the excess amount is added to the wages. In the example, ₹10,000 is added to the ₹20,000 wage, making it ₹30,000. However, the PF deduction still applies to the wage ceiling of ₹15,000. This means that the 12% PF deduction (PF deduction new labour code) for both the employer and the employee will be based on the old formula.

Employer PF contribution: ₹1,800
Employee PF contribution: ₹1,800
Total Take-Home Salary: ₹56,400 (Same under both old and new rules)
PF contribution is optional, not mandatory.

The ministry has clearly stated that PF deduction is mandatory only up to the wage limit of ₹15,000. Contributions above this are optional, not mandatory. This means that employees and employers can contribute to PF even on salaries exceeding ₹15,000 if they wish, but there is no legal obligation to do so.

Relief for Employees
The possibility of a reduction in take-home pay due to the new labor codes had been a subject of much discussion for some time. However, the ministry has made it clear that the existing rules for PF deductions will remain unchanged. There will be no reduction in take-home salary. This statement from the government has brought significant relief to millions of employees, especially those who had been worried that the new labor codes would reduce their take-home pay.

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