New Labour Codes Likely to Hit Q3 Profits as Payroll Costs Rise Across Sectors

Indian companies are witnessing pressure on third-quarter earnings following the rollout of the new labour codes in November 2025.

The changes increased mandatory wage-linked contributions, pushing up payroll costs in the December quarter. Information technology firms such as TCS, Infosys, and HCL Technologies have been the most affected due to their large domestic workforce and salary-heavy cost structures.

Several companies disclosed one-time expenses linked to higher gratuity, provident fund and leave liabilities, leading to a decline in net profits.

Analysts expect the impact to moderate in subsequent quarters, though some recurring cost pressure is likely to continue across sectors.