TCS aligns salary structures with new India Labour Code requirements: What it means for employees
TCS has aligned its salary structures with the new India Labour Code requirements, becoming one of the first major companies to publicly announce the move. Here's what the change could mean for employees' take-home salary, PF contributions, gratuity and retirement savings.
- Jul 10, 2026,
- Updated Jul 10, 2026 1:29 PM IST
Tata Consultancy Services (TCS), India's largest IT services company, has become one of the first major corporates to publicly announce that it has aligned its salary structures with the requirements of the new India Labour Codes, signalling that companies are preparing for the eventual rollout of the country's biggest labour law reforms in decades.
The announcement came as part of the company's June quarter (Q1 FY27) earnings. Sudeep Kunnumal, Chief HR Officer at TCS, said, "This quarter, we completed annual salary increments for all associates globally and aligned salary structures with the new India Labour Code requirements." He added that the company continues to invest in AI infrastructure and next-generation skill development platforms while fostering a workplace where employees feel "safe, valued, trusted and empowered to grow."
Although TCS did not disclose the specific changes made to employee compensation, its statement has renewed attention on what the new labour codes could mean for salaried employees across sectors.
What are the new labour codes?
The Central government has consolidated 29 existing labour laws into four Labour Codes—the Code on Wages, the Industrial Relations Code, the Code on Social Security, and the Occupational Safety, Health and Working Conditions Code. The reforms are aimed at simplifying labour regulations, improving ease of doing business and expanding social security benefits for workers. While the laws have been passed by Parliament, they are yet to be implemented nationwide, pending notification by the Centre and readiness of states.
MUST READ: TCS CEO dismisses AI job cut fears, says workforce will continue to grow
One of the most significant provisions relates to the definition of "wages". Under the new framework, basic pay and dearness allowance together should generally constitute at least 50% of an employee's total remuneration. Many companies currently structure salaries with a lower basic pay and higher allowances, which helps reduce statutory contributions.
What changes for employees?
If employers revise salary structures to comply with the new wage definition, employees could see several changes.
A higher basic salary would lead to higher Employees' Provident Fund (EPF) contributions since PF is calculated on basic wages. While this could reduce monthly take-home salary for some employees, it would boost long-term retirement savings.
Similarly, gratuity benefits may increase because gratuity calculations are linked to basic wages. Employers may also need to modify payroll systems, update compensation structures and revise employment contracts to ensure compliance with the new rules.
The labour codes also improve social security by making fixed-term employees eligible for gratuity after one year of continuous service, bringing them closer to permanent employees in terms of benefits.
READ THIS: TCS Q1 FY27 results: Rs 12 per share interim dividend announced; check record date
Why TCS' move matters
As India's largest IT services exporter and one of the country's biggest private-sector employers, TCS' decision could encourage other companies to begin preparing for the transition. Large organisations typically update their payroll systems and HR policies well before regulatory changes come into force, helping minimise operational disruptions.
The announcement also reflects the broader focus among corporates on strengthening governance and compliance while investing in workforce development. Alongside aligning salary structures, TCS said it continues to invest in AI capabilities and employee upskilling, underscoring its long-term focus on building a future-ready workforce.
Q1 FY27 earnings
TCS reported a 4.6 per cent year-on-year (YoY) increase in consolidated net profit for the first quarter of FY27 at Rs 13,349 crore, compared with Rs 12,760 crore in the corresponding quarter last year.
Revenue from operations rose 13.9 per cent YoY to Rs 72,275 crore in the April-June quarter from Rs 63,437 crore a year ago, reflecting steady business growth despite global uncertainties.
Commenting on the results, TCS CEO and Managing Director K Krithivasan said the company maintained its growth momentum amid geopolitical and macroeconomic challenges. He highlighted a strong order book of $9.5 billion during the quarter, including a marquee AI-led transformation deal with SKF. Krithivasan also said TCS continued to add clients across key revenue segments, while its AI business reached an annualised revenue run rate of $2.6 billion.
As of June 30, 2026, TCS had a total workforce of 5,93,798 employees. The company's last twelve-month (LTM) attrition rate in its IT services business stood at 13.6 per cent during the quarter.
The company announced its Q1 FY27 results after market hours on Thursday. Earlier in the session, TCS shares ended 0.52 per cent lower at Rs 2,047.75 on the BSE.
ALSO READ: TCS share price targets by 18 analysts: Buy, hold or sell after Q1 results?
Tata Consultancy Services (TCS), India's largest IT services company, has become one of the first major corporates to publicly announce that it has aligned its salary structures with the requirements of the new India Labour Codes, signalling that companies are preparing for the eventual rollout of the country's biggest labour law reforms in decades.
The announcement came as part of the company's June quarter (Q1 FY27) earnings. Sudeep Kunnumal, Chief HR Officer at TCS, said, "This quarter, we completed annual salary increments for all associates globally and aligned salary structures with the new India Labour Code requirements." He added that the company continues to invest in AI infrastructure and next-generation skill development platforms while fostering a workplace where employees feel "safe, valued, trusted and empowered to grow."
Although TCS did not disclose the specific changes made to employee compensation, its statement has renewed attention on what the new labour codes could mean for salaried employees across sectors.
What are the new labour codes?
The Central government has consolidated 29 existing labour laws into four Labour Codes—the Code on Wages, the Industrial Relations Code, the Code on Social Security, and the Occupational Safety, Health and Working Conditions Code. The reforms are aimed at simplifying labour regulations, improving ease of doing business and expanding social security benefits for workers. While the laws have been passed by Parliament, they are yet to be implemented nationwide, pending notification by the Centre and readiness of states.
MUST READ: TCS CEO dismisses AI job cut fears, says workforce will continue to grow
One of the most significant provisions relates to the definition of "wages". Under the new framework, basic pay and dearness allowance together should generally constitute at least 50% of an employee's total remuneration. Many companies currently structure salaries with a lower basic pay and higher allowances, which helps reduce statutory contributions.
What changes for employees?
If employers revise salary structures to comply with the new wage definition, employees could see several changes.
A higher basic salary would lead to higher Employees' Provident Fund (EPF) contributions since PF is calculated on basic wages. While this could reduce monthly take-home salary for some employees, it would boost long-term retirement savings.
Similarly, gratuity benefits may increase because gratuity calculations are linked to basic wages. Employers may also need to modify payroll systems, update compensation structures and revise employment contracts to ensure compliance with the new rules.
The labour codes also improve social security by making fixed-term employees eligible for gratuity after one year of continuous service, bringing them closer to permanent employees in terms of benefits.
READ THIS: TCS Q1 FY27 results: Rs 12 per share interim dividend announced; check record date
Why TCS' move matters
As India's largest IT services exporter and one of the country's biggest private-sector employers, TCS' decision could encourage other companies to begin preparing for the transition. Large organisations typically update their payroll systems and HR policies well before regulatory changes come into force, helping minimise operational disruptions.
The announcement also reflects the broader focus among corporates on strengthening governance and compliance while investing in workforce development. Alongside aligning salary structures, TCS said it continues to invest in AI capabilities and employee upskilling, underscoring its long-term focus on building a future-ready workforce.
Q1 FY27 earnings
TCS reported a 4.6 per cent year-on-year (YoY) increase in consolidated net profit for the first quarter of FY27 at Rs 13,349 crore, compared with Rs 12,760 crore in the corresponding quarter last year.
Revenue from operations rose 13.9 per cent YoY to Rs 72,275 crore in the April-June quarter from Rs 63,437 crore a year ago, reflecting steady business growth despite global uncertainties.
Commenting on the results, TCS CEO and Managing Director K Krithivasan said the company maintained its growth momentum amid geopolitical and macroeconomic challenges. He highlighted a strong order book of $9.5 billion during the quarter, including a marquee AI-led transformation deal with SKF. Krithivasan also said TCS continued to add clients across key revenue segments, while its AI business reached an annualised revenue run rate of $2.6 billion.
As of June 30, 2026, TCS had a total workforce of 5,93,798 employees. The company's last twelve-month (LTM) attrition rate in its IT services business stood at 13.6 per cent during the quarter.
The company announced its Q1 FY27 results after market hours on Thursday. Earlier in the session, TCS shares ended 0.52 per cent lower at Rs 2,047.75 on the BSE.
ALSO READ: TCS share price targets by 18 analysts: Buy, hold or sell after Q1 results?