Has the system been updated according to the new labour law? What manual interventions are required to update salary structures?

The system provides the flexibility to configure salary structures based on your organization's requirements and applicable labour laws. However, salary structure changes are not applied automatically. Administrators must manually review and update the relevant salary components and formulas in the salary structure settings.

As per the new labour law requirements, components such as Basic Pay and ESI may need to be configured accordingly.

Basic Pay

Basic Pay, including Dearness Allowance (DA) and Retaining Allowance, should constitute at least 50% of the fixed CTC, as applicable.

You can configure the Basic Pay formula as:

Basic = CTC × 50%

ESI

Employees earning monthly wages up to ₹21,000 are generally covered under ESI. For ESI calculation, wages include applicable components such as Basic Pay and Dearness Allowance.

You can configure the ESI calculation based on the applicable components and government-prescribed eligibility and contribution rates.

For example:

ESI wages = Basic + DA

Note: Ensure that the eligibility conditions and contribution percentages are configured based on the applicable statutory requirements.

Manual interventions required

Administrators need to:

• Review and update salary structure formulas based on the applicable labour law requirements.
• Ensure that components such as Basic Pay, DA, and other allowances are mapped correctly.
• Review and update eligibility conditions for ESI and other statutory components, where applicable.
• Reprocess payroll after making the required changes so that the updated salary structure is reflected.
• Validate the updated structure using sample calculations to identify any discrepancies.

How to update the salary structure formula?

• Go to Payroll → Settings.
• Select the Pay Group for which you want to update the formula.
• Go to Salary Structure.

• Select Edit Settings.
• Update the Basic Pay formula as required. For example, configure it as CTC × 50%.

• Update the ESI calculation to include Basic Pay + DA, where applicable.
• Select Update to save the changes.

Verify the updated salary structure and validate the calculations before processing payroll.