Top I-T firms earmark Labour Code costs, less than 3% of payroll, Pg1

Key Highlights:

• Indian companies have earmarked over Rs 13,000 crore in Q3 2025-26 for the new Labour Codes.
• These provisions represent 3% or less of the previous financial year's employee costs for major IT firms and private banks, but 13% for IndiGo.
• The Labour Codes, notified in November 2025, consolidate 29 existing labour laws.
• Tata Consultancy Services, Infosys, and HCL Technologies accounted for a third of the total provision due to their large workforces.

Detailed Insights:

• The Labour Codes widen the social security net, set basic pay at 50% of total remuneration, and reduce gratuity eligibility to one year.
• Larsen & Toubro provisioned Rs 1,344 crore, while IndiGo's Rs 969 crore provision nearly doubled its quarterly net profit.
• Axis Bank provisioned only Rs 33 crore due to prior accrual for social security expenses since 2020.
• HDFC Bank, ICICI Bank, and Kotak Mahindra Bank set aside Rs 1,037 crore, Rs 215 crore, and Rs 128 crore, respectively.
• Reliance Industries, SBI, NTPC, Power Grid Corporation of India, and Etermal made no additional provisions, citing immaterial impact.
• Etermal will assess the impact of remaining provisions upon notification of final rules and effective dates.
• Total Labour Codes provision by Nifty 50 companies is expected to increase as more companies announce results.
• Public sector companies' provisions are negligible compared to private ones, with SBI already complying with major provisions.

Key Concepts Involved:

• Labour Codes: Consolidated laws governing wages, industrial relations, social security, and occupational safety.
• Gratuity: A sum of money paid to an employee at the end of a period of employment as a token of appreciation.
• Nifty 50: The flagship index of the National Stock Exchange, comprising 50 of the largest Indian companies.