New Labor Code: Employees will get Rs 500 extra if ‘this’ thing is not available in the office, what is the special rule?

• If the office does not have this facility
• Employees will get 500 rupees extra
• What exactly is creche allowance?

New Labor Code : New Labor Codes have come into effect. The Central Government has notified the rules related to these codes on 8 May 2026. This means that employees working in companies where the Central Labor Code rules are applicable can avail the benefits under these rules. But do you know that there is one thing which is not provided by the company but its extra rupees is paid to you by the company. One such benefit is ‘Crèche Allowance’ i.e. childcare allowance; The amount of this allowance will be at least ₹500 per child, per month. This allowance will be given for a maximum of two children, up to the age of six. Let’s know the detailed rules.

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What exactly is creche allowance?

Under earlier labor laws, it was mandatory for companies to provide ‘creche’ facilities. However, as per the current law, companies have two options: they must either provide actual crèche facilities or pay a monthly allowance to the employee concerned. Consequently, whether your company has its own in-house crèche facility, you may need to inquire with your company to see if they are willing to provide you with a crèche allowance.
As these labor code rules are fixed by the central government, some companies are still bound to comply with the new labor code rules of both central and state governments. Consequently, if you are an employee of such a company, you might have to wait a little longer.

What is the new procedure regarding ‘Creche Allowance’?

Lokesh Gulati, Partner, PwC India, told ‘ET Wealth Online’ that as per Rule 37, women employees, widowers or single parents whose children are below six years of age. Such employees are entitled to ‘Crèche’ facility. But if they are not provided with such facilities, the concerned company or organization may pay monthly ‘Crèche Allowance’ to the employee in such cases.

What is the amount of childcare allowance?

According to Gulati, the amount of nursery allowance should not be less than ₹500 per child, per month; or such amount as may be notified by the Central Government from time to time. Gulati explains that the nursery allowance is meant for children below the age of six. This allowance is applicable for a maximum of two children. The only exception to this rule arises when twins or multiple children are born at the same time during the second birth and the resulting total number of children exceeds two.

What are the tax rules for employees?

At present, no specific tax-exemption is provided for this under the ‘Income-tax Act, 2025’. PwC India’s Gulati observes: “Hence, childcare allowance is treated as a ‘taxable element’.” So it is necessary to get the benefit of the employee.

Mandatory to follow Labor Code rules?

‘OSHWC Central Rules, 2026’ which was notified on 8 May 2026. The rules mentioned therein are applicable only to the following establishments:

railways, mines, oil fields, major ports, air transport services, telecommunications, banking and insurance companies;
Central Public Sector Undertakings and their subsidiaries or corporations;
Autonomous bodies owned or controlled by the Central Government; Also establishments of contractors working for organizations in respect of which the Central Government acts as the ‘Government proper’.

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