Revised wage rules hit IT, Banks hard as labour codes take effect

With the new labour codes coming into effect from the December quarter, companies across sectors have begun factoring in additional charges arising from revised wage definitions, weighing on their bottom lines. The impact has been particularly pronounced in the IT and financial services sectors, given their large employee bases.

HDFC Bank, the country’s largest private-sector lender with an employee base of about 2.2 lakh, reported an additional charge of ₹1,037 crore for the quarter ended December 2025, accounting for over 10% of its total employee costs. Overall employee expenses rose 21% year-on-year, with the labour code-related charge contributing 58% of the increase. The bank’s consolidated wage bill for the quarter stood at ₹10,300 crore.

Also Read: New labour code triggers ₹5,000-crore one-time hit for top IT firms

In comparison, ICICI Bank, which employs roughly half the number of staff as HDFC Bank, provisioned ₹215 crore, or 3.4% of its total employee cost of ₹6,243 crore. ICICI Bank’s wage bill rose 10% during the quarter.

In absolute terms, ICICI Bank’s employee costs increased by ₹569 crore, including the labour code-related charge of ₹215 crore. HDFC Bank’s employee expenses rose by ₹1,783 crore, of which ₹1,037 crore was attributable to the change in labour codes.

Explaining the higher provisioning, HDFC Bank Chief Financial Officer Srinivasan Vaidyanathan said post Q3 earnings that the estimates were based on the best available information and derived through an actuarial process, factoring in assumptions around wage definitions, employee tenure, and evolving regulatory rules.

“The provision represents a high-level estimate and may change as greater clarity emerges, noting that a forward-looking impact cannot be determined at this stage,” said Vaidyanathan.

Employee costs accounted for 12.7% of HDFC Bank’s total revenue during the quarter, compared with 11.4% for ICICI Bank. HDFC Bank’s revenue rose 24.2% year-on-year to ₹81,106 crore, while net profit increased 12.2% to ₹19,807 crore. ICICI Bank reported a 5.7% rise in revenue to ₹54,908 crore, even as net profit declined 2.7% to ₹12,538 crore.

Also Read: New labour rules will make hiring costlier, say staffing firms

Earlier, India’s top five IT services companies—TCS, Infosys, HCL Technologies, Wipro and Tech Mahindra—together reported nearly ₹5,000 crore in additional expenses in the December quarter due to the new labour codes.