Updated wage regulations impact IT and banking sectors significantly as new labor codes are implemented.

As the new labour codes take effect in the December quarter, businesses across various sectors are beginning to incorporate extra costs stemming from revised wage definitions, affecting their profit margins. This impact is especially significant in the IT and financial services sectors, where the employee base is substantial.

HDFC Bank, the largest private-sector lender in the country with approximately 2.2 lakh employees, reported an additional charge of ₹1,037 crore for the quarter ending December 2025, representing over 10% of its total employee costs. Overall employee expenses increased by 21% year-on-year, with the labour code-related charge making up 58% of this rise. The bank’s consolidated wage bill for the quarter reached ₹10,300 crore.

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In contrast, ICICI Bank, which employs nearly half as many staff as HDFC Bank, set aside ₹215 crore, or 3.4% of its total employee cost of ₹6,243 crore. ICICI Bank’s wage bill grew by 10% during the quarter. In absolute numbers, ICICI Bank’s employee costs rose by ₹569 crore, which includes the labour code-related charge of ₹215 crore. HDFC Bank’s employee expenses increased by ₹1,783 crore, with ₹1,037 crore linked to the changes in labour codes.

HDFC Bank Chief Financial Officer Srinivasan Vaidyanathan explained the higher provisioning in a post-Q3 earnings discussion, stating that the estimates were based on the most accurate information available and derived through an actuarial process that considered wage definitions, employee tenure, and changing regulatory rules.

“The provision represents a high-level estimate and may change as more clarity becomes available, indicating that a forward-looking impact cannot be accurately assessed at this time,” Vaidyanathan noted.

During the quarter, employee costs accounted for 12.7% of HDFC Bank’s total revenue, in contrast to 11.4% for ICICI Bank. HDFC Bank’s revenue increased by 24.2% year-on-year to ₹81,106 crore, with net profit growing by 12.2% to ₹19,807 crore. ICICI Bank reported a 5.7% increase in revenue to ₹54,908 crore, even as net profit fell by 2.7% to ₹12,538 crore.

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

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