Impact of New Labour Codes on Salaries: Delays and Expectations
Your in-hand salary may not change under the new labour code yet, know why
The Economic TimesImage: The Economic Times
The implementation of new labour codes in India, announced on November 21, 2026, has been slow, leaving many salaried employees without immediate benefits. While some states have begun to amend their laws, the full impact on salaries may take time to materialize as employers adjust their payroll systems and compensation structures.
- 01New labour codes announced in November 2026 are not yet fully implemented across India.
- 02States like Gujarat and Bihar have made amendments, but many others lag behind.
- 03Changes in salary may be indirect, affecting terminal benefits rather than immediate take-home pay.
- 04Employers are reviewing compensation structures, causing delays in visible changes.
- 05Provident fund contributions may rise due to the revised wage definitions, impacting net salaries.
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The new labour codes in India, announced on November 21, 2026, aimed to enhance employee benefits such as provident fund contributions and gratuity payments. However, six months later, many states have yet to implement these codes, leaving employees without the promised advantages. Legal experts highlight that while some changes can occur without state approval, most require it. For instance, states like Gujarat and Bihar have already amended their labour laws, moving ahead of others. The slow rollout is attributed to delays in notification, lack of guidance, and varying infrastructure across states. According to Abhinav Rastogi, a partner at Khaitan & Co, the impact on salaries may not be immediate; changes are often reflected in terminal payments rather than monthly salaries. Additionally, the definition of 'wages' under the new codes could increase provident fund contributions, potentially affecting take-home pay for some employees. Employers are advised to reassess their pay structures to prevent adverse effects on employee morale. As the implementation continues, employees may need to wait longer to see the full benefits of the new regulations.
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Employees may experience changes in their provident fund contributions, which could reduce their net salaries if their wages are below the threshold. This could affect their financial planning and overall morale.
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