New Labour Codes 2025: The biggest question among employees regarding the new labour codes was whether it would reduce their take-home salary? Now, the Ministry of Labour and Employment has clarified that if the PF deduction is made at the statutory wage ceiling of Rs 15,000, there will be no change in the take-home salary of employees.

According to a post released by the ministry on a social media platform, the impact of PF deductions as per the old and new rules has been shown on a total package of Rs 60,000 (Rs 20,000 basic + DA and Rs 40,000 allowance) (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, which will remain Rs 56,400.

What has changed and what has not changed in the new labor code?

The ministry explained that if an employee’s allowances exceed 50% of their total salary, the additional amount is added to their wages. For example, a 20,000 rupee wage has been increased by 10,000 rupees to 30,000 rupees. However, PF deductions still apply to the 15,000 rupee wage ceiling. This means that the 12% PF deduction for both employers and employees (PF deduction new labor code) will be based on the same formula.

Employer PF contribution: Rs 1,800
Employee PF contribution: Rs 1,800
Total take-home salary: Rs 56,400 (same in both old and new rules)
PF contribution is optional, not mandatory.
PF deduction is mandatory at the wage limit of Rs 15,000.

The ministry has clearly stated that PF deductions are mandatory only at a wage threshold of Rs 15,000. Contributions beyond this limit are optional, not mandatory. This means that employees and employers can contribute to PF even on salaries above Rs 15,000 if they wish, but there is no legal requirement to do so.

Relief for employees

The possibility of a reduction in take-home pay due to the new labor code has been discussed for some time. However, the ministry’s clarification has made it clear that the current PF deduction rules will remain unaffected. There will be no reduction in take-home pay. This government statement has brought significant relief to millions of employees, especially those who long feared that the new labor code would reduce their take-home pay.