Labour Law: Now, employees will receive all their outstanding dues within just two days of leaving their job. Until now, in most cases, it used to take employees 40 to 45 days to receive their outstanding payments after resigning or being terminated.
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Labour Law: Now, employees will receive all their outstanding dues within just two days of leaving their job. Until now, employees typically had to wait 40 to 45 days to receive their pending payments after resigning or being terminated. However, this inconvenience is soon coming to an end. Under the government’s new labour laws, employees will receive their full dues from their previous employer within two days. They will no longer face prolonged delays. Previously, the delay in receiving outstanding salary dues—often taking over 45 days—would frequently cause financial hardship for employees.
What is the New Rule?
Effective April 1, 2026, the new rule mandates that companies must complete an employee’s Full and Final (FnF) settlement within just two working days. This regulation has been implemented under the Code on Wages, 2019. According to the new provision, if an employee resigns, is terminated, or if the company ceases operations, the company is required to clear all outstanding payments due to the employee within two working days. Previously, this entire process would often take anywhere from 30 to 90 days.
What is a Full and Final Settlement?
A Full and Final Settlement refers to the calculation and payment of all outstanding dues payable to an employee upon the termination of their employment. This encompasses everything from their salary to various other allowances and service-related benefits.
What is included in a Full and Final Settlement?
Final Salary: The salary for the last month, calculated based on the actual number of days worked.
Leave Encashment: Payment for any accumulated or unutilized leave days.
Bonuses and Incentives: Payments received based on performance.
Gratuity: In certain cases, this is now payable even after just one year of service and must be disbursed within 30 days. This rule offers significant relief to employees, as they no longer have to endure a long wait to receive their dues.
Reimbursements: Repayment of office-related expenses, such as travel costs or other miscellaneous expenditures.
Deductions: Deductions made for taxes, salary advances, outstanding loans, or for the non-return of company assets.
