Despite one-time charges in Q3 FY2026, the impact of new labour codes on aggregate earnings has been modest for the broader corporate sector. The more noticeable effects have been concentrated in manpower-intensive sectors like IT/software, manpower services, and select consumer facing sectors.

New labour codes triggered one-time gratuity and leave encashment charges in Q3 FY2026. However, gratuity applicability remains structurally limited, with eligibility confined to only 15-20% of India’s 560 million workforce, given the prevalence of self-employment and small establishments.

At an aggregate level, the financial impact of the new labour codes on corporate India has been modest, with the earnings impact for listed companies estimated at less than 10 basis points (bps) on an annualised basis, despite one-time charges recognised in Q3 FY2026.

Exhibit 1: Formulation of new labour codes

Source: ICRA Research