Daijiworld Media Network – New Delhi
New Delhi, Nov 29: Indian companies are bracing for higher manpower costs as they overhaul HR policies and salary structures to align with the upcoming four labour codes. Experts estimate overall wage bills could rise by 5–10%, with some firms experiencing even sharper increases.
According to Sonu Iyer, National Leader, People Advisory Services – Tax at EY India, the rise is mainly driven by the new uniform definition of wages, which increases employer payouts on gratuity, overtime, bonuses, and leave encashment. Labour-intensive sectors such as manufacturing, MSMEs, and companies with fragmented pay structures are expected to feel the biggest impact.
Firms with a larger share of variable pay, performance-linked incentives, and allowances may see more moderate increases. Viswanath PS, CEO of Randstad India, said a 5–10% rise in manpower cost is a reasonable expectation for such companies, though the impact will differ based on industry and compensation design.
As organisations prepare for the transition, many are reviewing hiring strategies, especially the balance between contract and fixed-term employment. They are also restructuring salaries to comply with the new wage calculation norms.
Atul Gupta, Partner – Labour and Employment Practice at Trilegal, noted that remuneration in kind up to 15% will now be treated as wages, compelling employers to reassess which components qualify under the revised definition. He added that gratuity payouts are likely to see the biggest jump.
Industry expert Prabir Jha, Founder and CEO of Prabir Jha People Advisory, said manpower costs could rise 5–12% for most organised companies and could go up to 10–15% or more in organisations heavily dependent on allowances or contract labour.
From the employee standpoint, the codes offer clear advantages. Sudhakar Sethuraman, Partner at Deloitte India, highlighted that the new regulations prohibit employers from reducing wages, ensuring that workers benefit directly from the transition.
The government maintains that a significant cut in compliance burdens under the new labour codes will help offset the additional costs for companies, including expenses related to overtime payments and mandatory health checks for workers.