Guide
Classify Every Pay Component First, and the Labour Codes Become a Data Task You Can Finish
The labour codes ask each pay component to sit against a statutory definition. We build the component master and the HR record behind it, so your provider's calculation starts from clean inputs.
4-minute read5 November 2026
In Brief
- Pay components carry names chosen for tax, custom or market comparison. A restructure decided before they are classified rests on an estimate, and it is hard to defend later.
- We see four actions: build a component master, date every change of treatment, structure the data the codes rely on, and check the classification with your payroll provider before you restructure.
- Thinqmesh fits HRKit, the system that runs our own HR, to your teams and data within four weeks, and produces the figures your payroll provider needs in their format.
Most discussion of India's labour codes begins with the salary structure and what a restructure does to take-home pay. For the people running payroll, the first question sits underneath: payroll systems hold pay components as names on a salary template, and those names were chosen for tax, custom or market comparison. The codes ask each one to be placed against a statutory definition, with a calculation that can be shown afterwards. Our view is that this is a data job first, done before any decision to restructure.
A Restructure Without Classification Rests on an Estimate
A component master that holds only a name cannot say which clause of the wage definition a payment falls under, whether it enters the test, from what date, or who approved it. Overtime varies by period, so the figure varies with it, which matters on a manufacturing shift pattern.
The same records feed gratuity, fixed-term eligibility, worker status and final settlement. We record the classification of each component and a dated history of each person's classification, with a record of who approved each treatment. Your payroll provider keeps the statutory calculations and filings, and starts from inputs it can rely on.
Four Actions That Prepare Payroll Data for the Labour Codes
Each action produces a record that your payroll provider and your auditors can use, whichever way you decide to structure pay.
Build a Component Master With the Clause Behind Each Pay Code
A name on a salary template cannot say which statutory clause a payment falls under or whether it enters the wage test.
For each pay code we record the clause of the wage definition it falls under, whether it enters the test, the date from which that treatment applies, and who approved it. Overtime, employer contributions and in-kind items each get an explicit decision. Your payroll provider then calculates from classified inputs.
Get started
- Export every pay code in use, with its name and where it appears.
- Mark each code you cannot place against the definition with confidence.
Date Every Change of Treatment and Record Who Approved It
A classification that changed last year needs a date and a name, or it cannot be reproduced for an inspector or an employee.
Treatments change as the codes, the rules and the guidance settle. We keep a dated history of each component's classification and each person's classification, so any past period can be rebuilt from the record. Every approval records who asked, who decided and when.
Get started
- Ask who last changed a pay component and on what basis.
- Check whether that change can be found in a record today.
Structure the Data That the Codes Also Rely On
Gratuity, fixed-term service, worker status and final settlement each depend on a fact that is often held in a letter or a spreadsheet.
Contract start dates and renewals, the worker status flag, exit dates, leave balances and attendance with overtime consent should be structured data in one record. A flag that was once loosely maintained now decides an entitlement, so we check each against the source documents when your records are moved across.
Get started
- List every fixed-term and contract employee with start and end dates.
- Check how worker status is recorded for supervisors.
Check the Classification With Your Payroll Provider Before Restructuring
Statutory calculations and filings stay with your payroll provider, which is the right place for work that must be exact every time.
We produce the figures your provider needs, in their format and on their schedule, and we state clearly which side of the line anything falls on. Reviewing a sample of classified components together gives the restructuring decision a firm base before you commit to it.
Get started
- Send your provider the component list with the clause you assigned.
- Agree the format and the day on which figures reach them.
How Thinqmesh Solves This
HRKit is open source and runs our own HR, so the design is already working and the four weeks go into your teams, policies and data. Statutory calculations and filings remain with your payroll provider.
- Week 1
HRKit on Your Data
HRKit is configured on your data and your records are assessed, because their condition can move a date and issues found early protect it.
- Week 2
Teams, Roles and Approval Chains
Your teams, roles and approval chains are set up, with a record of who asked, who approved and when.
- Week 3
Your Records Moved Across and Checked
Existing staff records are moved across and checked, with anomalies in dates and balances flagged early.
- Week 4
Payroll Figures in Your Provider's Format
Leave rules, holidays and carry-over are set to your policy, and payroll figures are exported in your provider's format and on their schedule.
You finish with your HR running on your own system, classified records behind every approval, and payroll figures delivered to your provider on their schedule. Reviews and hiring are agreed separately.
