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India’s labour codes, effective November 2025, expand wage definitions, triggering one-time costs like higher gratuity and leave encashment for firms. TCS reports ₹2,128 crore and HCL ₹956 crore impacts in Q3 FY26, mainly from past service liabilities. Services sector faces the brunt with rising social security contributions, slightly cutting employee take-home pay if CTC holds steady.
Labour Codes (தொழிலாளர் சட்டம்): India’s four new Labour Codes mandate that basic pay + dearness allowance must form at least 50% of total CTC, ending the practice of inflating allowances to reduce PF and gratuity liability. While employees will enjoy higher retirement benefits and bigger gratuity payouts, most will see 5-10% lower take-home salary unless employers increase overall CTC.
In a historic decision, the Government of India has announced that the four Labour Codes – the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020 are being made effective from 21st November 2025, rationalising 29 existing labour laws. Together, these Codes empower both workers and enterpr
