New labour Codes raise Nifty 100 firms' wage bills by ₹17.6K crore

IT, banking, aviation take biggest hit in Q3; 73 of 96 firms already counting the cost

The recently implemented new labour Codes (NLC) dealt a sizeable financial blow to listed companies in the third quarter (October-December/Q3) of 2025-26 (FY26). A majority of India’s top-listed firms made provisions for additional costs arising from the NLC. 

Under the new Codes, basic pay must now constitute at least 50 per cent of an employee’s overall cost to company. Fixed-term employees are now eligible for gratuity after just one year of continuous service, compared with five years previously. Together, these provisions are expected to increase companies’ payouts for gratuity, social security, and retirement benefits. Most large listed companies made one-time financial provisions to account for higher gratuity obligations. 

The sectors hit hardest were information technology (IT) services, followed by banking, aviation, and large industrial companies such as Larsen & Toubro (L&T), Tata Motors, Maruti Suzuki India, and JSW Steel. 

Tata Consultancy Services led the list, making a one-time provision of ₹2,128 crore for higher payouts under NLC. This represented 5.5 per cent of its salary and wage expenses in Q3FY26 and 16.1 per cent of its adjusted net profit for the quarter. (Adjusted net profit excludes one-time NLC-related provisions.) 

It was followed by L&T, which set aside ₹1,344 crore in Q3FY26, equivalent to 10.5 per cent of employee expenses and 32.8 per cent of its adjusted net profit. Infosys made a provision of ₹1,289 crore, while airline operator InterGlobe Aviation allocated ₹1,037 crore — 46 per cent of its employee expenses and half of its adjusted net profit for the quarter. 

In total, 73 of the 96 Nifty 100 companies in a Business Standard sample reported an NLC-related financial impact of ₹17,631.5 crore. Other companies are still assessing the full effect. The impact represented 7.9 per cent of these companies’ combined salary and wage expenses and 10.5 per cent of their combined adjusted net profit in Q3FY26. These 73 companies recorded combined salary and wage expenses of roughly ₹2.22 trillion and adjusted net profit of around ₹1.68 trillion. 

Within the Nifty 50 index, 41 of 49 companies reported a total NLC impact of ₹14,855 crore, equivalent to 7.7 per cent of their combined salary and wage bill and 10.6 per cent of adjusted net profit. These 41 companies recorded combined employee expenses of roughly ₹1.94 trillion and adjusted net profit of around ₹1.4 trillion. 

Some major index companies still evaluating the financial impact of the NLC include Reliance Industries, State Bank of India, Oil and Natural Gas Corporation, Coal India, NTPC, Power Grid Corporation of India, Adani Enterprises, and Eternal.