Indian Companies Earmark Rs 13,307 Crore for Labour Code Implementation
India's leading corporations have set aside more than Rs 13,000 crore in the October-December 2025 quarter to address the financial implications of the newly enacted Labour Codes, according to data analysis. This provisioning, totaling Rs 13,307 crore, was reported by 41 Nifty 50 companies that have disclosed their latest financial results for the first nine months of the 2025-26 fiscal year.
Labour Code Provisions: A Minor Share of Payroll for Key Sectors
The data reveals that for major IT companies and private banks, these provisions amounted to 3% or lower as a percentage of the previous financial year's employee costs. However, there were exceptions, such as airline carrier IndiGo, which allocated 13% of its payroll expenses. The consolidated profit after tax for these 41 companies stood at nearly Rs 1.75 lakh crore during the reporting period.
Breakdown of Provisions Across Industries
A significant portion of the total provisioning, approximately one-third, was contributed by three IT giants: Tata Consultancy Services, Infosys, and HCL Technologies. This is attributed to their large workforce sizes. Other notable provisions included infrastructure major Larsen & Toubro, which set aside Rs 1,344 crore net of taxes, and IndiGo with Rs 969 crore. IndiGo's provision was nearly double its quarterly consolidated net profit of Rs 550 crore.
In contrast, some companies made minimal or no additional provisions. For instance, Axis Bank, with over 1 lakh employees, provided just under Rs 33 crore for gratuity changes. Puneet Sharma, Chief Financial Officer of Axis Bank, explained that the bank had been accruing for social security expenses since 2020, resulting in a smaller catch-up provision. Meanwhile, private sector peers like HDFC Bank, ICICI Bank, and Kotak Mahindra Bank allocated Rs 1,037 crore, Rs 215 crore, and Rs 128 crore, respectively.
Companies Reporting No Material Impact
Five Nifty 50 companies—Reliance Industries, State Bank of India (SBI), NTPC, Power Grid Corporation of India, and Eternal (formerly Zomato)—made no additional provisions, citing that the incremental impact of the Labour Codes was "not material." Eternal noted that it would assess any financial effects upon notification of final rules. Public sector entities, in general, reported negligible or small provisions compared to private companies, with SBI stating compliance with major provisions and Punjab National Bank reporting no impact.
Background on the Labour Codes
Notified by the Government in November 2025, the four Labour Codes consolidate 29 existing labour laws and introduce key changes. These include widening the social security net for all workers, setting a floor for basic pay and allowances at 50% of total remuneration, and making employees eligible for gratuity after one year of service. The codes aim to streamline labour regulations and enhance worker benefits.
Future Outlook and Pending Disclosures
The total provisioning by Nifty 50 companies is expected to increase as more firms announce their results. Companies with large workforces, such as Coal India, which employed 2.2 lakh people as of March 31, 2025, have yet to release their quarterly figures. However, given the trend of minimal provisions in public sector companies, Coal India may follow a similar pattern. The data underscores the varied approaches companies are taking to adapt to the new labour regulations, with most major firms absorbing the costs as manageable one-off expenses.
