Will the New Labour Codes Boost Your Salary? Industry HR Experts Weigh In

New Delhi, February 13:
With the implementation of the new labour codes, workers across India are hopeful of salary increases. However, industry experts suggest that while wage revisions may occur, the impact will likely be modest for most sectors. Specialized industries such as IT may see a slightly different trend.

Impact on Salary Structures

Since the new labour codes came into effect in November 2025, companies have seen a rise in costs associated with gratuity, overtime, bonuses, and leave encashment. This is because these benefits are now calculated based on the new definitions of salary. Some companies, especially in the IT sector with large employee bases, reported lower profits in the last quarter due to one-time expenses and provisions arising from the new rules.

Salary Hikes Driven by Skills, Demand, and Productivity

HR specialists emphasize that salary increments are primarily determined by skill, productivity, and market demand, not solely by compliance costs. In competitive markets, reducing salaries could risk losing talent, which could prove more expensive than absorbing additional benefit costs. However, margin-sensitive sectors, such as certain IT services and non-banking finance segments, may see slightly restrained salary growth.

Expected Salary Growth

According to Aon Talent Solutions-India, companies are adjusting for the impact of the new labour codes in different ways: some are creating separate budgets for increased benefits, while others are adjusting them within the overall salary pool. Aon projects an average salary increase of around 9% for 2026, noting that many companies had already prepared buffers for increased expenses.

Where Increments Will Be Higher

Axis Bank HR Head Rajkamal Vempati says salary hikes will be selective rather than broad-based. Companies are likely to prioritize high performers and business-critical roles, particularly where there is a talent shortage or specialized skills are in demand.

Adjustment Period

Alkem Laboratories President and Global HR Head Rajarshi Ganguly points out that companies will review and recalibrate compensation structures after analyzing the finer details of the labour codes. The process of stabilization is expected to take 2-3 months, ensuring employees are not adversely affected and may even benefit from certain adjustments.

In summary, while the new labour codes introduce higher compliance costs, salary increases will be strategic and selective, benefiting high-demand roles and ensuring long-term workforce stability.