Decoding new definition of wage, its impact

According to new labour laws, wages include basic pay, dearness allowance and retaining allowance

- DIPAK MONDAL @ New Delhi

THE new Labour Codes, which were notified recently, have for the first time introduced a single, universal definition of wages.

The long-awaited clarification is likely to significantly impact salary structuring, social security contributions, and compliance obligations for both employers and employees.

Under the revised definition, wages include basic pay, dearness allowance, and retaining allowance-forming the core compensation payable in monetary terms for work performed. However, the code lists several components that will not be considered part of wages, including bonus (not part of employment terms), employer PF or pension contributions, HRA, conveyance allowance, overtime, commission, gratuity, retrenchment compensation, and value of certain amenities like housing, water, light, or medical attendance.