New 'wages' definition raises the base for gratuity and other benefits
What’s happening
Under the Code on Wages, 'wages' means basic pay, dearness allowance and retaining allowance, and if excluded items such as house rent and conveyance allowances exceed half of total pay, the excess is added back; this lifts the base for gratuity and other statutory payments. It does not require basic pay to be exactly 50% of total pay.
What to do
Test salary structures against the 50% rule and model the higher gratuity and statutory costs before the April 2027 pay cycle.
How Workbliss can help
Workbliss financial wellbeing sessions explain changes like this in plain language, country by country.
Plan support for your teamsSource
ksandk.com. Checked October 19, 2026.