The new labour codes, notified on November 21, 2025, will reshape salary structures in India, focusing more closely on basic pay, variable components and long-term social security benefits like provident fund (PF) and gratuity.
According to Achal Khanna, CEO, SHRM India, Asia Pacific and MENA, the new framework establishes a national benchmark for remuneration, replacing the earlier system that allowed employers wide flexibility in structuring pay.
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A NEW BENCHMARK FOR WAGES
“The new wage legislation establishes a national benchmark for remuneration, moving away from the previous model that allowed individual employers to set their pay rates,” Khanna says.
Earlier, many organisations compensated low wages by splitting salaries into multiple components. The new labour codes now mandate that at least 50% of an employee’s total wage must be paid as base (fixed) wages, with the remaining portion allowed as allowances.
“The base wage must be at lea
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