A Fairer Workplace in India: How GCCs Can Lead Under the New Labour Codes

India’s new labour codes (effective 21 Nov 2025) materially change social security, wages and employment terms: fixed-term employees now qualify for gratuity after one year, annual paid-leave qualification reduced to 180 days, overtime requires consent and is paid at double rates, a national floor wage is established, and ESIC coverage expands nationwide. For GCCs — which rely on flexible talent models, large tech/knowledge workforces and cross-border service delivery — these changes raise short-term cost and compliance workstreams but also present opportunities to stabilize talent, improve employer brand, and redesign total-reward frameworks for capability (not just cost) arbitrage.

Our opinion — Impact on GCCs in India

1) Payroll & total-cost (CTC) implications — immediate and predictable costs

**What Changed:**the Code on Wages and allied codes increase the portion of salary that must be treated as “basic wages” for statutory calculations, and fixed-term employees are eligible for gratuity after one year. This will mechanically raise employer liabilities for gratuity and statutory contributions (PF/ESIC) unless employers restructure CTC.

GCC impact:

• Higher recurring expense per head: For teams with many fixed-term hires or contractors converted to FTEs, gratuity and PF-like social security costs will increase sooner and more often.
• Take-home pressure: Employees may see slightly lower take-home pay unless the GCC increases gross CTC to keep net pay stable. Media coverage points to this likely take-home compression.

Action for GCCs:

• Re-model CTC/compensation bands immediately (run scenarios: current vs. +PF/gratuity/ESIC range).
• Prioritise adjusting employer vs employee splits (while balancing market competitiveness).
• Communicate transparently with employees about structure changes and net-pay impacts to avoid attrition surprises.

2) Workforce strategy — fixed-term hiring, contractors and talent flexibility

**What Changed:**fixed-term employees are now afforded gratuity after one year, and the codes broaden social security protections and make appointment letters and terms clearer for many categories.

GCC impact:

• Cost of short-term projects rises: When GCCs use fixed-term contracts for ramp projects, the one-year gratuity triggers sooner — increasing the true cost of short assignments.
• Rethink contractor models: Using third-party vendors or gig arrangements may offer mitigation, but the codes also expand social security definitions and protections for gig/contract work; state rules will matter.
• Talent planning: GCCs may shift to shorter micro-engagements (under 1 year), or redesign career paths to convert high-value fixed-terms into permanent roles earlier to secure retention and capability investment.

Action for GCCs:

• Audit active fixed-term roles and vendor contracts; tag roles with >9-12-month duration for cost review.
• Negotiate vendor T&Cs to factor in the new statutory costs or consider converting high-value contractors to permanent roles where it improves retention and capability build-up.
• Work with legal/comp teams to build compliant, predictable contracting templates.

3) Compliance, HR ops and state variation

**What Changed:**the federal framework sets floors (e.g., national floor wage) but states retain powers to set higher standards and notify rules — so implementation will vary across states. The labour ministry’s materials also emphasise inspector-cum-facilitator roles and portability (Aadhaar/UA-number).

GCC impact:

• Operational complexity: GCCs with centers in multiple states must track differing state notifications (wage floors, overtime thresholds, ESIC applicability).
• Increased documentation: Appointment letters, change-in-terms, payroll records and timely salary disbursal rules must be audited and standardised.

Action for GCCs:

• Create a state-rules matrix (wage floors, ESIC thresholds, overtime variations) and integrate into HRIS compliance rules.
• Run an immediate payroll/HR audit (past 12 months) for timely wage release and appointment-letter coverage.
• Strengthen payroll governance: on-time payments, statutory calculations, and reconciliations.

4) ESIC & social security expansion — health and mobility benefits

**What Changed:**ESIC coverage expands nationwide, increasing the population eligible for ESI benefits.

GCC impact:

• For GCCs, where the workforce is largely white-collar and many employees previously fell outside ESIC thresholds, the practical effect depends on thresholds and whether employees are already covered by other schemes (e.g., PF + private health). However, expanded ESIC can increase employer contributions on lower-paid roles and must be reflected in benefits design.
• Positive opportunity: better social security portability improves internal mobility across sites and states.

Action for GCCs:

• Validate which employee bands will now fall under ESIC and update payroll inputs.
• Reassess total benefits: if ESIC improves medical coverage, companies can rationalise overlapping benefits (but carefully — avoid erosion of perceived benefits).

5) Working hours, overtime, and flexible schedules — advantage for modern GCC models

**What Changed:**basic working hours unchanged (8/48), but states can permit flexible weekly structures; overtime needs employee consent and is paid at 2x baseline.

GCC impact:

• Shift scheduling & overlapping time zones: GCCs supporting global operations often need flexible schedules (night shifts, compressed weeks). The law preserves flexibility but increases overtime cost and requires consent — so informal or ad-hoc overtime will be costlier.
• Design opportunity: GCCs can formalise shift premiums, create voluntary shift pools and offer comp time options where lawful.

Action for GCCs:

• Build voluntary shift rosters with clear consent workflows and overtime trackers in HRIS.
• Convert ad-hoc “extra hours” culture into structured, consented programs with clear premium rules.

6) Employer brand, retention and talent attraction — net positive if managed well

**What Changed:**stronger protections (paid leave qualification reduction, appointment letters for digital/media workers, ESIC reach) improve worker rights and predictability.

GCC impact:

• Employer brand uplift: GCCs that proactively embrace the new standards (transparent appointment letters, clear leaves, improved social security) can strengthen talent attraction and reduce disputes.
• Retention: Having gratuity eligibility earlier and clearer terms may improve loyalty for mid-career specialists.

Action for GCCs:

• Use the implementation as an employer-brand campaign: “transparent terms, stronger social security” — attract passive talent.
• Train managers on the new entitlements to avoid managerial miscommunication.

7) Strategic & financial recommendations

Immediate (0–60 days)

• Run a statutory cost impact model by center and role band. (Finance + People)
• Update appointment-letter templates and issue missing letters for roles in scope.
• Implement payroll rule changes and test payroll runs showing gross/net outcomes.

Medium term (60–180 days)

• Rebuild vendor contracts or convert strategic fixed-term talent to permanent roles.
• Create a state-notification watchlist and automate compliance flags in HRIS.
• Recalibrate reward mix: market allowances, flexible benefits, shift premiums.

Longer term (6–12 months)

• Redesign career and capability roadmaps for GCCs to emphasise retention and internal mobility rather than short-term cost arbitrage — lean into capability arbitrage. (GCC trend reports support this strategic pivot.)

Closing view — risk vs opportunity

Risk: short-term margin compression and higher compliance overheads, particularly for GCCs with many fixed-term roles and multi-state footprints.

Opportunity: GCCs that act fast—reengineering CTCs, automating compliance, and using the change as an employer-brand differentiator—can strengthen retention, reduce future disputes, and make India a more predictable base for long-term capability build-up.