The Economic Times

New labour code: Can higher gratuity and social security costs under Social Security Code, 2020 be offset by employers by salary restructuring ?

The recent notification of the Social Security (Central) Rules, 2026 under the Code on Social Security, 2020 marks a significant shift in Indias wage and social security compliance framework. As the expanded definition of wages increases social security liabilities, many employers may consider restructuring salary structures to manage rising costs. However, section 124 of the Code places an important restriction on such measures by prohibiting employers from reducing employee wages or benefits to offset these additional liabilities.