Higher compliance costs under the four new labour codes may disproportionately impact micro, small, and medium enterprises (MSMEs) more than large companies as they will require human resource (HR) overhauls and face increased wage payouts, said industry bodies and HR firms.

Pratik Vaidya, head of HR compliance & labour committee at India SME Forum, said moving from familiar state-wise laws to a new compliance architecture may feel overwhelming for small firms. This is because they operate with thin margins, informal processes and limited advisory support. "Unlike large corporations, MSMEs do not have in-house legal or HR teams. Without phased implementation, clear guidance, digital handholding and a strong facilitation framework, labour codes may be perceived less as ease of doing business and more as compliance pressure. This is especially during an already challenging economic cycle", he added.