What “wages” means now
Wages are all pay for work, and include basic pay, dearness allowance and retaining allowance. A list of payments is excluded from wages:
- House rent allowance, and the value of housing, light, water and medical attendance the employer provides
- Conveyance allowance and travel concessions
- The employer’s contributions to PF, pension and social security
- Statutory bonus, overtime allowance and commission
- Gratuity, retrenchment compensation and other payments on leaving
- Reimbursement of expenses incurred for the work
The 50% rule
If the excluded items above add up to more than half of total remuneration, the amount above half is added back into wages. The effect is that at least 50% of pay is treated as wages for PF, gratuity and bonus, however the structure is labelled.
| Monthly pay | Basic + DA | Excluded allowances | Wages for statutory purposes |
|---|---|---|---|
| ₹60,000 | ₹20,000 | ₹40,000 (67%) | ₹20,000 + (₹40,000 − ₹30,000) = ₹30,000 |
| ₹60,000 | ₹32,000 | ₹28,000 (47%) | ₹32,000 (no add-back) |
The add-back applies to the payments the Code excludes. Remuneration in kind counts at its value, up to 15% of total wages. Employers restructuring pay often move towards basic + DA at about half of gross, and should check the effect on take-home pay and tax before rolling it out.
When wages must be paid
No wage period may be longer than a month.
| Wage period | Pay by |
|---|---|
| Daily | The end of the shift |
| Weekly | The last working day of the week |
| Fortnightly | The end of the second day after the fortnight |
| Monthly | The 7th of the following month |
| On leaving (removal, dismissal, retrenchment or resignation) | Within two working days |
Deductions
Only the deductions the Code allows may be made — taxes, PF and ESI, advances and loans, recovery for loss or damage, fines under a notified list, housing provided, and the like — and all deductions in a wage period together may not exceed 50% of wages.
Equal pay
No employer may discriminate on grounds of gender, including transgender identity, in wages or in recruitment for the same or similar work.
Minimum wages and the floor wage
Minimum wages now apply to every employee in every employment, not only listed ones. The Central Government sets a national floor wage, which may differ by region, and no state may fix a minimum below it. States revise their rates, usually twice a year through a dearness allowance. See minimum wages for where to find your state’s current rates.
WebHR’s payroll pays on the dates you set, and shows every deduction on the payslip. Finance → Salary Structures marks any structure whose basic + DA is under 50% of CTC.
Due dates
| What | When | How often |
|---|---|---|
| Monthly wages | By the 7th of the following month | Monthly |
| Full and final settlement on leaving | Within 2 working days of the exit | Event-based |
If a due date falls on a holiday, the authority’s own rule for the next working day applies. Full compliance calendar
References
Related
Plain-language guidance for HR teams, not legal advice. Checked against the sources above on 29 September 2026; the notification or your authority’s portal is final. Spotted something out of date? Tell us.