New Labour Law Codes: Rising Wage Bills for IT Companies

India’s new Labour Codes are expected to push up wage expenses for IT and IT-enabled services (ITES) companies. As a highly formalised and employment-intensive sector, IT/ITES will see cost increases across compensation structures, health provisions, and compliance practices.

Revised Wage Definition to Drive Up Statutory Costs

Under the new rules, an employee’s basic salary must account for at least 50% of total compensation. Previously, employers kept basic pay relatively low and allocated more to allowances, helping reduce statutory contributions such as provident fund, gratuity, and leave encashment. With the mandatory 50% basic-pay requirement, these payouts will naturally rise.

Also Read: Will Your Take-Home Salary Drop After the 4 New Labour Codes? Explained 

Mandatory Health Checks Add to Employee Costs

The Labour Codes also impose compulsory annual health examinations for employees aged 40 and above. This single provision is expected to add around ₹1,000–₹2,500 per employee annually, increasing the overall healthcare expense burden for companies.

In addition to wage and health mandates, firms are likely to face higher costs associated with enhanced compliance workloads. More manpower, systems, and processes will be needed to meet the new regulatory standards.

As per news reports, the combined effect of these regulatory changes could lead to a 5–10% increase in total payroll costs for IT and ITES organisations.

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