More cos may take a hit as labour codes debut

Reworked gratuity & leave encashments spell additional expenses for India Inc

- Jas Bardia & Devina Sengupta

The corporate landscape may see a surge in expenses in the December quarter, as the impact of India’s historic labour reforms hits home. While the shift is expected to dampen short-term profitability, executives and consultants described it as a short-term adjustment, particularly in the services sector.

On Monday, two of India’s largest information technology services companies—Tata Consultancy Services Ltd (TCS) and HCL Technologies Ltd— acknowledged the impact of the new regime. While TCS jotted down costs of ₹2,128 crore, HCLTech set the figure at ₹956 crore.

More companies may face additional costs as they rework gratuity and leave encashment costs due to the broader definition of wages, said Alok Agrawal, partner, Deloitte India. “Possibly, these payroll costs may also increase on account of overtime due to the broader definition of “workers”, he said.