Salary will not come down, Government said
Labour Code Law: The Union Ministry of Labor and Employment has clarified that, despite the implementation of the new labor code, there will be no reduction in employees’ take-home pay, provided provident fund (PF) deductions remain within the legal limit of ₹15,000 per salary.
The ministry stated that companies cannot force PF deductions above ₹15,000. This means, 12% of your PF contribution is mandatory only up to ₹15,000. Contributions above that amount are entirely your choice. This clearly indicates that companies cannot reduce employees’ take-home pay.
The government implemented all four new labor codes on November 21, 2025. The most significant change is the new uniform definition of wages, based on which PF, gratuity, and ESI will be calculated. This will require companies to restructure their employees’ CTC structure, but it will not negatively impact their in-hand salaries.
The ministry stated that the new PF system does not reduce take-home pay. PF will only be charged on the prescribed wage ceiling of Rs 15,000. This statement put an end to the confusion among employees.
Example: What will be the impact on your salary?
Suppose your total salary = Rs 60,000
Basic + DA = Rs 20,000
Allowance = Rs 40,000
