How India's new labour laws had more worker perks, but less pain for firms

Though India's new labour codes raised employee costs, it was less than feared. For just the NSE 500 companies, employee expenditure had already risen from Rs 3.8 lakh crore in Q1FY25 to Rs 4.2 lakh crore by Q2FY26. But when the new labour codes kicked in, Q3FY26 saw a further bump to Rs 4.3 lakh crore. Despite India’s 560 million strong workforce, only 15–20 percent are eligible for gratuity, structurally limiting the broader financial fallout. The codes trimmed operating profit margins of listed companies by less than 10 basis points amounting to roughly Rs 8,000 crore. The IT sector bore a Rs 6,300 crore hit, with LTIMindtree seeing the steepest impact at 7.9 percent of its core operational profit. Manpower services felt it harder — SIS Limited alone absorbed a 43 percent charge. Even before the codes came into effect, employee costs across the IT and manpower services sector were rising. These two sectors topped the list of ten sectors for the highest employee costs.

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