Resigned or Terminated? Employees to Receive Full and Final Settlement Within 2 Days Under New Labour Law

The new labour code has standardised several employment practices, including full and final (FnF) settlements.

Under Section 17(2) of the Code on Wages, 2019, companies are now required to pay an employee’s complete final wages (excluding certain statutory payments like gratuity) within two working days of their last working day.

Previously, FnF payments were often delayed—some companies paid on the last working day, while others took up to 30 days—because settlements like gratuity and leave encashment had different deadlines. The new law simplifies this process and ensures faster payments.

Key points of this provision:

• Applies to all types of separations, including resignations and terminations.
• Covers all employees, regardless of salary level or category.
• Removes any previous salary-based limitations on settlement timelines.

This change ensures employees receive their dues quickly and uniformly, enhancing financial security during transitions.