Summary: India’s consolidation of 29 central labour laws into four Labour Codes marks a landmark transformation of the country’s regulatory landscape, with far-reaching implications for M&A transactions. The introduction of Labour Codes is not just a compliance issue, but one that actively impacts deal making. While the Labour Codes promise a more streamlined compliance framework in the long term, the current transitional phase — where central rules remain unfinalised and most states are yet to implement the Labour Codes — introduces significant near-term complexity for dealmakers. In this blog, we aim to highlight some of these considerations, including on valuation impact, penalty enhancements and heightened due diligence requirements. This blog also serves as a summary of ongoing considerations for transactions in light of the new Labour Codes.
India’s labour laws have undergone a historic transformation with the implementation of four Labour Codes — the Code on Wages, 2019 (“Wages Code”), the Industrial Relations Code, 2020, the Occupational Safety, Health and Working Conditions Code, 2020 (“OSH Code”), and the Code on Social Security, 2020 (“SS Code”, and together “the Codes”) — consolidating 29 central labour laws into a unified system. However, the central government has not finalised rules, and most states have not implemented them.
For M&A transactions, this shift presents a nuanced landscape. While the legacy laws were complex, they were well-tested; in...
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