Ambiguous Rules Raise Compliance Concerns, Could Impact Costs and Payroll Structures
New Delhi | Report: Arun Sharma

With the deadline for the implementation of India’s new labour codes drawing closer, concerns across the industry have intensified. Leading industry bodies and employer associations have urged the Central government to issue immediate clarifications on several key provisions, warning that ambiguity in the rules could complicate compliance and significantly affect corporate costs and accounting practices.


Industry representatives have pointed out persistent confusion over critical issues such as the definition of wages, social security contributions, gratuity, leave encashment and bonus calculations. Particular anxiety surrounds provisions slated to take effect after 2025, with companies seeking clarity on whether the new norms will have any retrospective implications.


Employer groups argue that if gratuity and social security provisions are applied retrospectively, companies could face a substantial financial burden. The Institute of Chartered Accountants of India (ICAI) has also weighed in, recommending that revised rates and calculation methodologies be implemented prospectively from the current quarter rather than being applied to previous periods.


Industry bodies have further called for the prompt notification of draft rules to ensure uniformity between Central and State-level regulations. According to them, the absence of clear guidelines is preventing companies from finalising their human resource policies, wage structures and social security frameworks.
Experts caution that without timely clarification from the Centre, the rollout of the labour codes could be delayed, potentially affecting industry confidence, investment decisions and employment growth. As uncertainty persists, the industry is now closely watching the government’s next move