Will these new labor codes affect upcoming salary hikes in India?

Yes, consultants predict that increased wage bills and new labour code payouts may lead to smaller salary increments in the upcoming appraisal season for Indian companies.

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New Labour Codes Chop ₹12,000 Cr from India Inc. Profits

Q: What is the financial impact of new labour codes on India's top companies?

Twenty-five of India's top 30 companies reported a combined profit reduction of approximately ₹12,000 crore in the December quarter due to the new labour codes.

Q: Why are new labor codes causing profit reductions for companies like TCS?

The new codes mandate that wages must account for at least 50% of remuneration, increasing statutory payouts like gratuity and leave liability, leading to one-time costs for companies.

13 Feb

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Summary

25 of India's top 30 companies saw profits fall by nearly ₹12,000 crore.
New labour codes mandate higher social security and retirement contributions.
Wage bills are expected to rise, potentially impacting upcoming salary hikes.

New Labour Codes Chop ₹12,000 Cr from India Inc. Profits

In the December quarter, India's top companies experienced a substantial financial blow due to newly implemented labour codes. Twenty-five of the top 30 firms reported a combined profit reduction of approximately ₹12,000 crore. This impact stems from revised mandates for social security and retirement benefit contributions.

These new codes require wages to constitute at least 50% of remuneration, increasing statutory payouts like gratuity and provident fund. Tata Consultancy Services alone noted a ₹2,128-crore impact, primarily due to gratuity and leave liability adjustments for past employee salaries.