New Delhi, Aug. 29 -- Under the implementation of the new labour code, a pivotal provision for salaried employees mandates that basic wages must make up at least 50% of total compensation (CTC) when computing contributions toward Provident Fund (PF), statutory bonus, and retirement gratuity. While the rule applies to standard compensation structures, it specifically omits terminal benefits like gratuity paid upon employment termination.

Crucially, Section 2(y) includes a proviso: if the collective total of specified excluded pay items exceeds 50% of an employee's total compensation, any amount over that 50% mark will automatically be reclassified and treated as "wages."

Excluded components are salary allocations that are kept out of the...