Under the Code on Wages, 2019, in computing the wages for the purpose of the Code, the term "wages" excludes certain components; however, if the excluded components exceed one-half of the total remuneration, what is the consequence?

Section 2(y) of the Code on Wages, 2019 defines "wages" and lists several exclusions such as bonus, house rent allowance, conveyance allowance, and certain other components. To prevent employers from structuring salaries so as to keep the "wages" component artificially low, the proviso stipulates that where the payments made under the excluded heads exceed one-half (or such other percent as notified) of the total remuneration, the amount in excess shall be deemed to be remuneration and added back to wages. This ensures that statutory benefits linked to wages — such as gratuity, provident fund and bonus — are computed on a fair base and cannot be diluted by manipulating the salary structure.