Balasubramanian A, Senior Vice President at TeamLease Services, said the company is rolling out the new rules across its client base of more than 3,000 firms and about 3.5 lakh contract workers.
“The definition of wages is now unified,” he said, adding that earlier interpretations varied across companies.
Higher PF and ESI costs
Under the new system, components such as provident fund (PF), employee state insurance (ESI), gratuity, bonus and leave encashment are calculated on a single wage base. This has expanded the number of employees covered under ESI and increased PF contributions.
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Balasubramanian explained that earlier only workers earning up to ₹21,000 a month were covered under ESI. Now, coverage is linked to 50% of total wages, bringing employees’ earnings up to about ₹42,000 within the bracket.
“ESI contribution is now an additional cost that companies have to bear,” he said.
He added that in a recent rollout for a client with 10,000 employees, take-home pay rose for around 4,000 workers, fell slightly for another 4,000, and remained largely unchanged for the rest. Overall company cost remained stable or rose marginally.
According to him, this increase can be absorbed within a normal annual increment cycle of 7–12%.
Margins could face pressure
Ambarish Raghuvanshi, Interim CFO at Info Edge, said the labour codes support formalisation and social security but will also increase the cost of hiring.
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“The cost of doing business is going to go up,” he said, noting that this could affect corporate margins, especially in sectors that employ large numbers of workers.
He added that the impact will differ across companies, depending on their gratuity policies and existing benefit structures, which need to be checked in annual reports.
Limited impact on gig platforms
Addressing concerns about quick commerce and gig platforms, Balasubramanian said the total cost for such companies may not rise sharply.
“Most platforms already provide insurance and some form of cover,” he said.
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He explained that government-led social security under the new code could replace private insurance spending rather than add to it. For example, ESI offers cashless healthcare for workers and their families, something private insurers do not provide at similar scale.
Instead of paying insurers, companies may pay into government schemes, with benefits remaining similar or improving, he said.
For the full interview, watch the accompanying video
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