| S. No. | Query | Reply |
| 1. | Which rules will be applicable during the transition period? | - As per the provisions of Section 6 of General Clauses Act, 1897, old rules will remain in force till final notification of new rules under the Code, to the extent these are in line with Codes.
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| 2. | What does the term “wages” mean? | The definition of “Wages” covers: - All remuneration whether by way of salaries, allowances or otherwise payable to a person employed. This includes: Basic pay, Dearness allowance, Retaining allowance, if any
- If the payments/allowances other than Basic pay, Dearness allowance and Retaining allowance exceed 50% or such percentage as notified of all remuneration, then amount exceeding 50% or such percentage as notified shall be added in the “Wages”.
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| 3. | Definition of wages and the components it would cover. | The definition of “Wages” covers: - All remuneration whether by way of salary, allowances or otherwise. These include Basic pay, Dearness allowance and Retaining allowance, if any.
- If the allowances (except gratuity and retrenchment compensation) exceeds 50% of all remuneration, the excess amount shall be added back to wages.
- Performance based incentives, Employee Stock Option Plans (ESOPs), variable part of the component or reimbursement-based payments to the employee shall not be part of the wages.
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| 4. | What is the 50% rule for allowances? | - If the allowances and benefits together (except gratuity and retrenchment compensation) exceed 50% of the all remuneration, the excess amount shall be added back to wages.
- Such added amount shall be treated as wages for statutory purposes.
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| 5. | Whether Leave Encashment be part of allowances? | - As mentioned in Section 2(y) of Code on Wages, 2019, leave encashment is not a part of allowances.
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| 6. | Does this definition of wages apply to all labour laws? | - This single definition of wages applies across all four Labour Codes
- The same definition applies uniformly for statutory calculations
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| 7. | Explain the allowance rule with a clear illustration? | - Total remuneration: ₹76,000 per month
- Basic Pay + Dearness Allowance: ₹20,000
- Allowances: ₹40,000
- Other components (Gratuity and retrenchment compensation): ₹16,000
- Total allowance paid: ₹56,000
- Max. allowance allowed for calculation of wages (50% of total remuneration): ₹38,000
- Excess allowance over 50% limit: ₹2000
- ₹2000 shall be added back to wages (Basic Pay + DA) for statutory compliances.
- Statutory calculations shall be made on revised wages: ₹22,000
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| 8. | Whether Gratuity calculation will be applicable prospectively or retrospectively. | - Gratuity will be applicable w.e.f. 21st Nov, 2025 i.e. date of enforcement of the Code.
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| 9. | Clarification on gratuity calculation in view of many companies considering December month as year end. | - Gratuity will be applicable w.e.f. 21st Nov, 2025 i.e. date of enforcement of the Code. Establishments may make provision as per accounting norms.
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| 10. | When gratuity is payable to an employee? | Gratuity shall be payable on following events: - On termination
- On superannuation (retirement due to age)
- On resignation
- On death or disablement due to accident or disease
- On expiration of a fixed-term employment contract
- On any other event notified by the Central Government
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| 11. | Are there any special provisions related to gratuity in certain cases? | - Completion of five years of continuous service is not necessary in case of:
- Death (paid to nominee or legal heirs)
- Disablement
- Expiration of fixed-term employment
- Other events notified by the Central Government
- If the nominee or heir is a minor, the share shall be deposited with a competent authority and invested in bank/financial institution for the benefit of such minor until majority
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| 12. | How is gratuity calculated? | - For every completed year of service or part thereof in excess of six months:
- 15 days’ wages per year (or such number as notified by Central Government) based on the rate of wages last drawn.
Special cases: - Piece-rated employees: Daily wages calculated as average of total wages for the three months preceding termination (excluding overtime)
- Seasonal employees: 7 days’ wages per season
- Fixed-term employment or deceased employees: Gratuity paid on pro-rata basis
- The maximum gratuity is as notified by the Central Government which is currently ₹ 20 lakhs.
- For employees re-employed after disablement:
- Wages for the period preceding his disablement shall be taken to be the wage received by him during that period.
- Wages for the period subsequent to his disablement shall be taken to be the wages as so reduced.
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| 13. | Does gratuity affect other agreements or awards? | - Nothing shall affect the right of an employee to receive better gratuity terms under any:
- Award
- Agreement
- Contract with employer
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| 14. | Whether the person drawing wages ₹18,000/- or more will be covered under the definition of worker as per OSH & WC Code. | - Any person, who is employed in a supervisory capacity drawing wages exceeding ₹18,000/- (or an amount as may be notified by the Central Government from time to time) is not included in the definition of worker.
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| 15. | Clarity on Core and Non-core activities. | - Core and non-core activities are clearly defined under the OSH & WC Code, 2020 [Section 57]. Principal employer may engage contract labour for core activities which are ordinarily carried out through contractor, or of intermittent nature or involve sudden increase in volume of work requiring time-bound completion.
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| 16. | Whether Journey Allowance for ISMW within the State for the long-distance workers may be allowed. | - As per OSH & WC Code, 2020, the employer shall pay to and fro journey allowance to ISMW once in a year from his native place to place of employment.
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| 17. | How will the ESI coverage be governed until the finalisation of Rules? | - The definition of wage has come into force with notification of the Code w.e.f. 21st Nov, 2025.
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