{"id":1303197,"date":"2025-12-03T09:21:32","date_gmt":"2025-12-03T03:51:32","guid":{"rendered":"https:\/\/trak.in\/stories\/?p=1303197"},"modified":"2025-12-03T09:22:02","modified_gmt":"2025-12-03T03:52:02","slug":"retirement-benefits-will-enhance-but-take-home-salary-will-reduce-with-new-labor-code-sbi-research","status":"publish","type":"post","link":"https:\/\/trak.in\/stories\/retirement-benefits-will-enhance-but-take-home-salary-will-reduce-with-new-labor-code-sbi-research\/","title":{"rendered":"Retirement Benefits Will Enhance, But Take Home Salary Will Reduce With New Labor Code &#8211; SBI Research"},"content":{"rendered":"\n<p>Several analysts are of the opinion that the new labour code is likely to result in lower take-home pay for many employees.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1000\" height=\"465\" src=\"https:\/\/trak.in\/stories\/wp-content\/uploads\/2025\/12\/Untitled-design-1-6.jpeg\" alt=\"\" class=\"wp-image-1303205\" srcset=\"https:\/\/trak.in\/stories\/wp-content\/uploads\/2025\/12\/Untitled-design-1-6.jpeg 1000w, https:\/\/trak.in\/stories\/wp-content\/uploads\/2025\/12\/Untitled-design-1-6-300x140.jpeg 300w, https:\/\/trak.in\/stories\/wp-content\/uploads\/2025\/12\/Untitled-design-1-6-768x357.jpeg 768w\" sizes=\"auto, (max-width: 1000px) 100vw, 1000px\" \/><\/figure>\n\n\n\n<p><strong>Why Would This Happen?<\/strong><\/p>\n\n\n\n<p>The <a href=\"https:\/\/www.deccanherald.com\/business\/personal-finance\/new-labour-code-may-reduce-take-home-salary-analysts-3810209\">new labour code<\/a> which came into effect from November 21 will affect the take-home pay for many employees as the requirement to ensure that the basic salary makes up at least 50% of the total cost-to-company (CTC) would prompt employers to restructure pay packages.<\/p>\n\n\n\n<p>In a note on Tuesday, SBI Research said, \u201cthe take-home salary may reduce as the retirement benefits will increase along with wage as the code mandated that basic salary will be at least 50% of CTC.\u201d&nbsp;<\/p>\n\n\n\n<p>Moving ahead, the contributions towards retirement benefit schemes like gratuity and provident fund (PF) are likely to increase under the new laws, the analysts noted.<\/p>\n\n\n\n<p>When it comes to the calculation of PF and gratuity, they are calculated as a certain percentage of basic salary.&nbsp;<\/p>\n\n\n\n<p>So, considering this change, the increase in basic salary will lead to higher contributions to the retirement benefits which in turn will lead to reduction in take home pay if the CTC remains the same.<\/p>\n\n\n\n<p>Under this change, the Centre has notified four new labour codes which have replaced existing 29 labour-related Central laws.<\/p>\n\n\n\n<p>Earlier, these laws were largely framed during the British colonial period.&nbsp;<\/p>\n\n\n\n<p>Coming to the latest regulations, they push for formalisation of labour and enhanced social security.<\/p>\n\n\n\n<p>India\u2019s social-security coverage increased from 19% of the workforce in 2015 to 64.3% in 2025 as confirmed by the International Labour Organisation.<\/p>\n\n\n\n<p><strong>Reducing Compliance Burden Substantially<\/strong>&nbsp;<\/p>\n\n\n\n<p>The new regulations are likely to push the social security coverage of workers in India to 80-85% in the next two-three years, said the SBI Research.<\/p>\n\n\n\n<p>Further adding, \u201cIn India, approx 44 crore people work in the unorganised sector, out of whom, around 31 crore unorganised workers are registered under the e-shram portal. By assuming 20% will shift from informal payroll to formal payroll, it will benefit around 10 crore beneficiaries.\u201d&nbsp;<\/p>\n\n\n\n<p>&nbsp;\u201cThough the new codes will escalate the cost of operation for the employers, it will reduce compliance burden substantially,\u201d assured SBI Research.<\/p>\n\n\n\n<p>It appears that the Industrial Relations Code, 2020, has reduced the number of rules to 51 from 105, forms to 18 from 37, and registers to zero from 3.&nbsp;<\/p>\n\n\n\n<p>The Co-founder &amp; CEO, TeamLease RegTech, Rishi Agrawal said, \u201cFor too long, land and labour, the two critical factors of productivity, have been shackled by archaic and burdensome regulations. This reform has liberated labour to a large extent.\u201d&nbsp;<\/p>\n\n\n\n<p>&nbsp;Moreover, Agrawal said, \u201cThe reform eases the regulatory cholesterol by reducing recordkeeping requirements by as high as 70%. It also promises to reduce deeply entrenched criminality for procedural contraventions by as high as 80%.\u201d&nbsp;<\/p>\n\n\n\n<p>They are expecting that these new regulations will give a push to formalisation of labour.&nbsp;<\/p>\n\n\n\n<p>The share of formal workers in India is estimated to be 60.4% of the total workforce, according to the Periodic Labour Force Survey data released by the Ministry of Statistics &amp; Programme Implementation.<\/p>\n\n\n\n<p>The SBI Research said, \u201cWe estimate a 15.1% increase in the formalisation rate post the implementation of 4 labour codes pushing labour market formalisation to 75.5%.\u201d&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Several analysts are of the opinion that the new labour code is likely to result in lower take-home pay for many employees. Why Would This Happen? The new labour code which came into effect from November 21 will affect the take-home pay for many employees as the requirement to ensure that the basic salary makes [&hellip;]<\/p>\n","protected":false},"author":30,"featured_media":1303205,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[9043],"class_list":["post-1303197","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-labor-code"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Retirement Benefits Will Enhance, But Take Home Salary Will Reduce With New Labor Code - SBI Research - Trak.in - Indian Business of Tech, Mobile &amp; Startups<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/trak.in\/stories\/retirement-benefits-will-enhance-but-take-home-salary-will-reduce-with-new-labor-code-sbi-research\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Retirement Benefits Will Enhance, But Take Home Salary Will Reduce With New Labor Code - SBI Research - Trak.in - Indian Business of Tech, Mobile &amp; Startups\" \/>\n<meta property=\"og:description\" content=\"Several analysts are of the opinion that the new labour code is likely to result in lower take-home pay for many employees. 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