India is one of the most dynamic economies in the world, and its workforce continues to grow at scale. The government’s introduction of the consolidated Four Labour Codes is designed to modernize outdated regulations and make employment more business-friendly.
For employers — especially global companies expanding into India — understanding the payroll implications is essential.
A New Wage Structure That Affects All Payroll Calculations
Under the new Codes, “wages” must make up at least 50% of total compensation.
This impacts:
- PF contributions
- Gratuity
- Bonus
- Leave encashment
- Termination payouts
Companies must reevaluate salary structures to remain compliant.
Wider Social Security Coverage
Gig workers, platform workers, and fixed-term employees are now included in social security frameworks.
For employers, this means:
- More eligible employees
- Higher contribution responsibilities
- Stricter reporting cycles
Digitalization of Payroll Records
Employers must maintain accurate digital registers for attendance, overtime, wages, and employee details. A strong HRIS is essential to meet these requirements.
New Employment Flexibility Coupled With Compliance Control
Fixed-term employment, streamlined hiring policies, and clearer industrial relations frameworks benefit employers — provided they maintain compliance discipline.
For Companies Expanding to India
A modern, automated payroll process ensures accurate statutory filings, maintains employee trust, and prevents costly penalties under the new Codes.
