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Labour Code Payroll Services in India

Payroll and salary-structure review for employers adapting to India's Labour Code framework. Wage-structure review, CTC modelling, payroll implementation and compliance support, scoped to your employee count, states and payroll software.

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Wage-structure review · CTC modelling · Payroll implementation · Compliance support

Scope-based professional assistance. Statutory contributions, taxes, legal opinions and government fees are separate unless expressly included in the engagement.

What Is Labour Code Payroll?

India's four Labour Codes were brought into effect from 21 November 2025. For employers, the new framework affects how wages, social-security contributions and other employment-related calculations may interact with payroll.

A Labour Code payroll review focuses on translating the applicable statutory framework into a practical payroll structure. This can include reviewing salary components, identifying affected statutory calculations, modelling employee impact and updating payroll-system rules.

It is not a replacement for a formal legal opinion where the employer requires a definitive interpretation of a disputed or complex labour-law issue.

The Four Labour Codes

The Labour Code framework consolidates and replaces a number of earlier central labour laws:

  • Code on Wages, 2019
  • Industrial Relations Code, 2020
  • Code on Social Security, 2020
  • Occupational Safety, Health and Working Conditions Code, 2020

The practical payroll impact is primarily connected with the Code on Wages and the social-security framework, while other Codes can affect employment policies and compliance processes.

State rules, notifications and sector-specific requirements remain important when implementing the framework.

The “50% Basic Salary” Misconception

A common payroll discussion is that the Labour Codes require basic salary to be exactly 50% of CTC. That is not the correct way to describe the statutory wage-definition framework.

The Code on Wages defines “wages” using specified remuneration components and provides for treatment of certain allowances when the excluded components exceed the prescribed proportion of remuneration. The calculation therefore depends on the statutory definition and the employee's remuneration structure.

A payroll review should model the actual wage components instead of applying a blanket “basic = 50% of CTC” formula to every employee.

Why Employers Should Review Payroll Structures

A wage-definition review can affect the base used for certain statutory calculations. Depending on the employee's structure and applicable provisions, this can have implications for PF, gratuity, bonus and other wage-linked calculations.

The financial effect is not identical for every employee or employer. A proper review should compare the current structure with the applicable statutory treatment and document assumptions rather than promising a fixed percentage increase or reduction.

What CorporateWalla Can Review

Depending on scope, a Labour Code payroll engagement can cover:

  • Current salary/CTC structure
  • Basic, DA and allowance components
  • Reimbursement and benefit treatment
  • Wage-definition analysis
  • PF-related payroll impact
  • ESI-related payroll impact
  • Gratuity-related modelling
  • Bonus-related wage considerations
  • Employee-wise CTC comparison
  • Employer-cost modelling
  • Employee take-home impact
  • Payroll software configuration requirements
  • Multi-state payroll considerations
  • Implementation checklist
  • Management report explaining material changes

The exact scope should be defined before work begins. A complex legal interpretation can require separate specialist counsel.

Before vs After Payroll Modelling

A useful review compares at least two scenarios:

Current structureProposed structure
Existing CTCRevised components
Existing salary componentsStatutory wage base under the applicable framework
Current statutory contribution baseRevised employer/employee contributions where applicable
Employee take-homeRevised take-home
Employer costRevised total employer cost
—One-time implementation considerations

The result should show assumptions and employee-level or representative calculations where appropriate. It does not promise that the proposed structure will always reduce employer cost or increase employee take-home.

PF, ESI and Gratuity Interaction

Labour Code payroll should not be reduced to PF alone.

Depending on the employee and applicable law, wage-definition changes can affect multiple wage-linked calculations. PF and ESI each have their own coverage and contribution rules, while gratuity has its own statutory framework. Monthly contributions continue to be handled through EPF filing and ESIC filing.

The employer should therefore review the complete payroll impact rather than changing only the “basic salary” field in the payroll system.

Multi-State Payroll

Employers operating across multiple states should consider state-specific rules, notifications and establishment requirements when implementing payroll changes.

A single national salary template may not be sufficient for every employee if Professional Tax, Labour Welfare Fund, minimum-wage requirements, leave rules or other state-specific obligations differ.

CorporateWalla can map payroll structures across locations where included in the engagement. Not every state has identical implementation requirements.

Labour Code Payroll Pricing

Pricing is scope-based rather than a universal fee, because Labour Code implementation can range from a limited salary-structure review to a multi-entity payroll transformation.

Multi-state and multi-entity reviews are quoted on a custom basis. For ongoing monthly payroll, see Payroll Management; for Zoho-based payroll setup, see Zoho Payroll Setup.

There is no fixed government fee for this consulting service. Government statutory dues are separate from professional fees.

What Is Not Automatically Included?

Unless expressly engaged, Labour Code payroll does not include:

  • Litigation
  • Legal representation before labour authorities
  • Binding legal opinions
  • Labour inspections or dispute defence
  • Drafting all employment contracts/policies
  • PF/ESI registration
  • Monthly EPF/ESIC filing
  • Income-tax assessment
  • Statutory audit
  • Actuarial valuation
  • International employment-law advice

These can be separately scoped with the appropriate specialist.

Common Mistakes

  • Assuming “basic must be 50% of CTC” is the Labour Code rule
  • Changing salary components without modelling statutory impact
  • Looking only at PF and ignoring other wage-linked obligations
  • Ignoring state-specific rules
  • Treating allowances as automatically excluded from wages
  • Changing payroll software without parallel testing
  • Applying one structure to every employee without checking contracts/categories
  • Promising a fixed employer-cost saving
  • Promising a fixed employee take-home increase
  • Treating a consultant's calculation as a substitute for legal advice where legal interpretation is disputed
  • Using old pre-21 November 2025 payroll assumptions without review

Not Sure Whether Your Current Salary Structure Needs a Labour Code Payroll Review?

Share your employee count, salary structure, states, payroll software and current PF/ESI setup. CorporateWalla can scope the wage analysis, CTC modelling and implementation work required.

Sensitive employee information should be shared only through the agreed secure workflow. This page is general information on payroll implementation under the Labour Code framework; central and state rules and notifications should be checked for the specific employer, and it is not a substitute for a formal legal opinion.

Transparent 3-tier pricing

Pick the speed and depth that matches your need. Same quality, same CA team — only the timeline changes.

Structure Review

Custom quote

Timeline: Fee based on employee count and complexity

Current salary/CTC structure review
Basic, DA and allowance components
Reimbursement and benefit treatment
Wage-definition analysis
Management report explaining material changes
Employee-wise CTC comparison
Payroll software configuration
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CTC Modelling

Custom quote

Timeline: Quoted on employee population and scenarios

Wage-definition analysis
PF- and ESI-related payroll impact
Gratuity-related modelling
Bonus-related wage considerations
Employee-wise CTC comparison
Employer-cost and take-home impact modelling
Payroll software configuration

Payroll Setup

Custom quote

Timeline: Quoted on software and implementation scope

Payroll software configuration requirements
Configuration of the approved structure
Parallel validation against agreed calculations
Go-live after employer sign-off
Post-implementation check of first payroll cycles
Implementation checklist

Government fee — paid by you at actuals

There is no government fee for this consulting service. Statutory dues such as PF, ESI and other contributions are paid to the respective authorities and are separate from professional fees.

Every price above is a professional fee, excluding GST and government charges. 50% on delivery.

Labour Code payroll work is priced on scope rather than a universal fee, because engagements range from a limited salary-structure review to a multi-entity payroll transformation. Statutory contributions, taxes, legal opinions and government fees are separate unless expressly included in the engagement.

How it works

Step 1

Payroll diagnostic

Review current salary structures, employee categories and payroll configuration.

Step 2

Legal-framework mapping

Identify the applicable Labour Code provisions and state-level considerations.

Step 3

Wage analysis

Map current components to the applicable wage definition.

Step 4

Scenario modelling

Calculate potential PF/ESI/gratuity/bonus and employee take-home effects where applicable.

Step 5

Management review

Present material changes, assumptions and implementation options.

Step 6

Payroll configuration

Translate the approved structure into the payroll system where implementation is included.

Step 7

Parallel validation

Compare test payroll outputs against the agreed calculations.

Step 8

Go-live

Implement the approved structure after employer sign-off.

Step 9

Post-implementation check

Review the first relevant payroll cycles for configuration/data exceptions.

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Documents required

Employee master
Current CTC/salary structures
Salary component definitions
PF/ESI registration details
Payroll reports
State/location mapping
Employment categories
Existing HR/payroll policies
Gratuity/bonus policy where applicable
Payroll software details
Previous statutory contribution reports
Any internal legal/payroll guidance already received

Why CorporateWalla®?

Wage-structure review

Current salary components are mapped to the statutory wage definition instead of applying a blanket "basic = 50% of CTC" formula.

CTC modelling

Current and proposed structures are compared, with assumptions and employee-level or representative calculations shown.

Payroll implementation

The approved structure is configured in the payroll system and checked through parallel validation before go-live, where implementation is included.

Compliance support

The review covers the complete wage-linked payroll impact, including PF, ESI, gratuity and bonus, not just the basic salary field.

Frequently asked questions

The four Labour Codes were brought into effect from 21 November 2025. Implementation also depends on the applicable rules, notifications and state-level framework.

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