Employees, employers both set to gain from the four labour codes: Teamlease Senior VP Balasubramanian Anantha Narayanan explains
"There are 29 labour laws which have been unified into four labour codes. That doesn’t sound astronomically significant but if you dig into one further level of detail, it does," said Narayanan.
- Nov 24, 2025,
- Updated Nov 24, 2025 3:27 PM IST
The four unified labour codes were much needed to overhaul the Indian workforce, explained Teamlease Senior VP Balasubramanian Anantha Narayanan, who said that both employees and employers are set to benefit from this even if there is a cost component to it.
Speaking to Business Today TV, Narayanan explained that when it comes to GDP per capita, India is far behind, with low productivity and a high degree of informality in the workforce.
“Out of the 55 crore people who participate in the workforce in India, 85 per cent that’s nearly 47 crore are part of the informal workforce. This means they do not get any kind of social security – health, life cover and retirement benefits – they don’t get any of this. There’s only 8 crore people outside of this who get all these social security benefits,” he said.
“What is the incentive really for the companies to shift the informal workers – the vast majority – to the formal workforce? There isn't much,” he said.
With the labour codes, employers will get relief on compliance, employees will get more gratuity, and there will be universal social security coverage.
“The compliance burden is significantly high. There are 29 labour laws which have been unified into four labour codes. That doesn’t sound astronomically significant but if you dig into one further level of detail, it does. There are 84 registers, 181 forms, 31 separate returns, 1,436 provisions,” he explained.
“Imagine if all of that got digitalised, imagine how much relief the companies would get. The bulk of this burden is borne by MSMEs, and not the big guys who can absorb the compliance, unlike small businesses who get squeezed under this compliance burden. If the compliance is reduced like this, there is no reason why they would not move informal workers to the formal workforce,” said Narayanan.
He explained that employees stand to gain as well. “The other angle from the employees’ perspective is that they look at these deductions such as PF, ESI and other things which they see as a burden on themselves because they lack awareness about what they can actually get through this. For as little as 4 per cent of their salary, they get cover under ESI which gives you unlimited, cashless health cover for self and up to seven members of the family. How many people actually know this?” he asked, referring to the social security and health insurance program for workers earning less than Rs 21,000 per month.
Then there’s the 1 crore gig workers in India who will be brought under the purview of social security.
There is also a cost burden, explained Narayanan. Employers will have to pay gratuity after one year and not four years and employees will have to consider their PF wages as 50 per cent of their CTC and not of the gross salary, which means the contribution goes up. “It also means that your net take home can potentially go down,” he said.
Narayanan said that employers should ideally ensure that the net take home is protected. “If there is any delta in terms of contributions that they can absorb, nothing like it. If attrition goes down because of this, it would be a benefit of the employer,” he added, agreeing that the PF changes would mostly impact the employees on the lower end of the salary range.
When it comes to gratuity, the cost for the employer will go up, he said, but it would give a lot of relief for employees.
The government on Friday notified all four Labour Codes, overhauling the labour laws. The reforms introduced universal social security coverage for gig workers, mandatory appointment letters for all employees, and statutory minimum wages with timely payment across sectors. The four Labour Codes include the Code of Wages (2019), Industrial Relations Code (2020), Code on Social Security (2020), and Occupational Safety, Health and Working Conditions Code (2020). These codes replaced 29 fragmented laws with a unified and modern framework. The changes also expanded rights and safety measures for women, including provisions for night-shift work. Workers aged over 40 years will receive free annual health check-ups. The reforms provide pan-India ESIC coverage, including for hazardous process units, and introduced a single registration, licence, and return system.
The four unified labour codes were much needed to overhaul the Indian workforce, explained Teamlease Senior VP Balasubramanian Anantha Narayanan, who said that both employees and employers are set to benefit from this even if there is a cost component to it.
Speaking to Business Today TV, Narayanan explained that when it comes to GDP per capita, India is far behind, with low productivity and a high degree of informality in the workforce.
“Out of the 55 crore people who participate in the workforce in India, 85 per cent that’s nearly 47 crore are part of the informal workforce. This means they do not get any kind of social security – health, life cover and retirement benefits – they don’t get any of this. There’s only 8 crore people outside of this who get all these social security benefits,” he said.
“What is the incentive really for the companies to shift the informal workers – the vast majority – to the formal workforce? There isn't much,” he said.
With the labour codes, employers will get relief on compliance, employees will get more gratuity, and there will be universal social security coverage.
“The compliance burden is significantly high. There are 29 labour laws which have been unified into four labour codes. That doesn’t sound astronomically significant but if you dig into one further level of detail, it does. There are 84 registers, 181 forms, 31 separate returns, 1,436 provisions,” he explained.
“Imagine if all of that got digitalised, imagine how much relief the companies would get. The bulk of this burden is borne by MSMEs, and not the big guys who can absorb the compliance, unlike small businesses who get squeezed under this compliance burden. If the compliance is reduced like this, there is no reason why they would not move informal workers to the formal workforce,” said Narayanan.
He explained that employees stand to gain as well. “The other angle from the employees’ perspective is that they look at these deductions such as PF, ESI and other things which they see as a burden on themselves because they lack awareness about what they can actually get through this. For as little as 4 per cent of their salary, they get cover under ESI which gives you unlimited, cashless health cover for self and up to seven members of the family. How many people actually know this?” he asked, referring to the social security and health insurance program for workers earning less than Rs 21,000 per month.
Then there’s the 1 crore gig workers in India who will be brought under the purview of social security.
There is also a cost burden, explained Narayanan. Employers will have to pay gratuity after one year and not four years and employees will have to consider their PF wages as 50 per cent of their CTC and not of the gross salary, which means the contribution goes up. “It also means that your net take home can potentially go down,” he said.
Narayanan said that employers should ideally ensure that the net take home is protected. “If there is any delta in terms of contributions that they can absorb, nothing like it. If attrition goes down because of this, it would be a benefit of the employer,” he added, agreeing that the PF changes would mostly impact the employees on the lower end of the salary range.
When it comes to gratuity, the cost for the employer will go up, he said, but it would give a lot of relief for employees.
The government on Friday notified all four Labour Codes, overhauling the labour laws. The reforms introduced universal social security coverage for gig workers, mandatory appointment letters for all employees, and statutory minimum wages with timely payment across sectors. The four Labour Codes include the Code of Wages (2019), Industrial Relations Code (2020), Code on Social Security (2020), and Occupational Safety, Health and Working Conditions Code (2020). These codes replaced 29 fragmented laws with a unified and modern framework. The changes also expanded rights and safety measures for women, including provisions for night-shift work. Workers aged over 40 years will receive free annual health check-ups. The reforms provide pan-India ESIC coverage, including for hazardous process units, and introduced a single registration, licence, and return system.