Basic Pay 50% Rule for Private Companies
Private companies often use the Basic Pay 50% Rule to create structured and compliant salary breakups for employees. This rule helps prevent excessive reliance on variable allowances that may lead to non-compliance with statutory benefits. By keeping basic pay at 50% or more, companies ensure consistent PF contributions and fair gratuity calculations. It also improves employee trust and reduces disputes related to compensation. Adopting this rule supports sustainable payroll management and long-term workforce stability.