On November 21, the government notified provisions of the Labour Codes. These Labour Codes consolidate twenty-nine existing labour laws into a unified framework governing employee benefits.
Like Infosys, Tata Consultancy Services Ltd (TCS) and HCL Technologies Ltd (HCL Tech) earlier made a combined provisions to the tune of Rs 3,084 crore.
Infosys Ltd, the second largest IT firm, on Wednesday said it took Rs 1,289 crore hit as one-time provisions to align with new Labour Codes, as its profit for the December quarter fell 2.2 per cent year-on-year (YoY) to Rs 6,654 crore compared with Rs 6,806 crore in the same quarter last year. Analysts were expecting the Bengaluru-based firm to report 5-11 per cent YoY rise in net profit for the quarter.
On November 21, 2025 the government notified provisions of the Labour Codes. These Labour Codes consolidate twenty-nine existing labour laws into a unified framework governing employee benefits during employment and post-employment and amongst other things introduce changes, including a uniform definition of wages and enhanced benefits relating to leave.
“The adjustments for Labour Codes represent an increase in gratuity liability arising out of past service cost and increase in leave liability together by $143 million (Rs 1,289 crore) which is recognised in the Consolidated Statement of Comprehensive Income,” Infosys said in a filinf to stock exchanges.
Like Infosys, Tata Consultancy Services Ltd (TCS) and HCL Technologies Ltd (HCL Tech) earlier made a combined provisions to the tune of Rs 3,084 crore. TCS is the largest IT firm in terms of FY25 net sales. HCL Tech is the third largest domestic IT firm.
The Labour Code provisions resulted in a one-time charge of Rs 2,128 crore for TCS towards gratuity and unearned leave. MOFSL this week said a normalised impact of about 10 to 15 basis points was likely for TCS from the next quarter.
TCS reported a 14 per cent year on year (YoY) decline in consolidated net profit to Rs 10,720 crore, compared with Rs 12,444 crore in the year-ago period. HCL Technologies also posted an 11.15 per cent YoY fall in consolidated net profit to Rs 4,082 crore, versus Rs 4,594 crore in the corresponding quarter last year.
The impact stemmed from changes in the redefinition of wages under the new Labour Codes. Wages used for calculating employee benefits such as gratuity and leave encashment were redefined. Companies were required to recalculate these benefits under the new definitions and make additional provisions where necessary.
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