Under The New Code on Wages, at least 50% of every employee's total remuneration must legally qualify as "wages." Tip the scale below to see how your own structure holds up, then run your full payroll register through the audit tool.
For years, employers minimised statutory cost by keeping "Basic" thin and stacking the rest into HRA, special allowance, and a dozen other heads - perfectly legal under the old framework. The Code on Wages closes that gap: if excluded allowances add up to more than half of total remuneration, the excess is automatically reclassified as wages, whether or not you intended it.
Every downstream number - PF, gratuity, bonus, the 50% test itself - depends on classifying each pay component correctly. Here is the working list.
| Component | Before | After fix |
|---|---|---|
| Basic Pay | ₹15,000 | ₹30,000 |
| HRA | ₹12,000 | ₹12,000 |
| Special Allowance | ₹28,000 | ₹13,000 |
| Conveyance | ₹2,000 | ₹2,000 |
| Medical Reimbursement | ₹3,000 | ₹3,000 |
| Total CTC | ₹60,000 | ₹60,000 |
Gross CTC is unchanged. What moves is where the money sits - and what it's calculated on. This is the exact logic the audit tool below applies to every row of your payroll.
Drop in your payroll export (.xlsx / .xls / .csv). Everything runs in your browser - no file ever leaves this page or reaches a server.
or click to browse · one row per employee, one column per pay component
The Labour Codes removed the old distinction between resignation and dismissal. Every exit - voluntary or not - now carries the same 2-working-day settlement obligation. Weekends and holidays don't count toward the window, but they don't pause your obligation either. Check a date below.
| Component | Timeline |
|---|---|
| Final salary, leave encashment, confirmed reimbursements, notice adjustment | Within 2 working days |
| Gratuity (Code on Social Security, 2020) | Within 30 days - 10%/annum penalty on delay |
| PF settlement (via EPFO) | Employee-initiated withdrawal; employer only updates exit date |
Share this with your payroll experts and leadership once your salary structure review above is complete.
For most companies, the first bill arrives from a departing employee's gratuity claim, or an internal / statutory audit finding, not a inspector's visit.
Up to ₹50,000 for a first offence, ₹1,00,000 for repeat offences - multiplied across every affected employee.
Understated wages mean PF and gratuity differences owed retrospectively, going back years, plus interest.
An employee's own math on "effective wage" rarely matches your payroll system - and they're usually right.
Non-compliant structures are a common finding in M&A and funding rounds - and get deducted from the offer.