What do 4 labour codes mean for Dalal Street bulls? Key stocks & sectors to watch out for

An amalgamation of 29 labour laws into four new codes in one of the biggest overhauls of workers' laws in decades is set to impact an estimated 40 crore workers in the domestic economy. Touted as the country's biggest labour reform since Independence, the new labour codes took effect on November 21 with the notification of all four Labour Codes. The four labour codes -- Code on Wages, Industrial Relations Code, Social Security Code, and Occupational Safety Code -- are aimed at improving worker protection and better investment conditions.

Some of the most significant aspects that the new laws cover include provisions for better equality for women in workplaces, gratuity for fixed-term employees after one year, free annual health check-ups and double wages for overtime.

Economists broadly view the new labour codes as a disruptive but ultimately transformative shift. Many trade unions have expressed concern about the new laws -- which finally saw the light of day five years after Parliament cleared them.

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What's the significance of the new labour laws?

According to the government's think-tank, NITI Aayog, the country's gig workforce is projected to grow from about 10 million in 2024-25 to over 23.5 million by 2030.

How will new labour codes impact stocks and sectors? Analysts weigh in

According to Zee Business research, the development is set to boost five stocks:

• Teamlease Services
• Quess Corp
• Thyrocare
• Metropolis
• Dr Lal Laboratories

The four codes are set to provide a big boost to staffing firms like Teamlease Services and Quess Corp and set to extend benefits like free annual health check-ups for workers above 40 years of age, benefiting companies like Metropolis, Dr Lal Pathlabs and Thyrocare.

On the other hand, analysts say, the new laws are set to increase the overall labour costs for companies like Eternal, Swiggy and Urban Company, besides real estate and manufacturing businesses.

Food and service delivery providers will be required to contribute 1-2 per cent of their annual turnovers to a social security fund under the new laws. According to the research, this is set to increase the costs for food delivery and quick commerce companies by rs 1.5-2.5 per order, impacting their earnings before interest, taxes, depreciation and ammortisation (EBITDA) by 4-10 per cent.

Besides, real estate companies are estimated to see an addition of 5-10 per cent in their labour costs over the coming year. Labour costs form 25-30 per cent of these businesses' overall project costs.

Here are key takeaways from the new labour norms:

• Social security and minimum wage benefits, safety, welfare, longer factory shifts, permission for night work for women and a higher threshold for layoff approvals (raised from 100 workers to 300)
• Companies gain more flexibility in managing their workforce
• Gig and platform work are formally defined for the first time ever
• The reforms will streamline compliance, strengthen protections and align the country's workforce with global labour standards for the government's 'Viksit Bharat @ 2047' (Developed India by 2047) vision
• PF, ESIC, insurance and maternity benefits extended to all worker categories (including gig and platform workers for the first time)
• Social Security Fund to support life cover, disability aid, health benefits and pension schemes for vulnerable worker groups
• Timely wage payments and a national floor wage; employers required to issue appointment letters even for informal jobs
• Women workers gain equal pay protections, safer work environments, permission to work night shifts with safeguards, 26 weeks maternity leave, work-from-home options and mandatory crèche facilities in establishments with 50+ employees
• Safety rules from seven sectors extended to all industries and mandates free annual health check-ups for workers above 40
• Safety committees to be compulsory in large workplaces, supported by uniform, national safety standards