What the new Labour Code means for your Full & Final Settlement
Since 21 November 2025, employers in India must pay wages within 2 working days of an employee's removal, dismissal, retrenchment, resignation, or closure of the establishment — under Section 17(2) of the Code on Wages, 2019, one of the four Labour Codes that took effect that day. That two-day rule covers wages, not every item in a full and final settlement.
A typical F&F statement still itemises unpaid salary, leave encashment, gratuity (where eligible), any bonus due, and reimbursements. Only the wage component sits on the two-working-day clock. Gratuity is excluded from the Code on Wages definition of wages and is payable on its own timeline under the Code on Social Security, 2020 — generally 30 days from the date it becomes payable.
Before this, there was no single statutory deadline for the whole F&F packet — in practice many employers took 30 to 45 days, sometimes longer. The two-working-day wage rule is a real, mandatory change, not a suggestion — and many employers still aren't fully following it, simply because it's recent.
If wages on exit are overdue, a plain written request is a reasonable first step. If that doesn't get a response, put it in writing formally.
Questions people ask
- How long does an employer have to pay wages on exit under the new Labour Codes?
- Within two working days of the employee's removal, dismissal, retrenchment, or resignation, under Section 17(2) of the Code on Wages, 2019 — one of the four Labour Codes that came into force across India on 21 November 2025. In a resignation with notice, that clock is treated as running from the day employment actually ends.
- Does this apply to every kind of exit?
- It applies to removal, dismissal, retrenchment, resignation, and becoming unemployed because the establishment closed. Superannuation or retirement is not listed in Section 17(2); those exits follow other wage-payment timelines. The two-day rule is about wages, not the entire full-and-final packet.
- What counts as part of the full and final settlement?
- A typical F&F statement itemises unpaid salary, leave encashment, gratuity (if eligible), any bonus due, and reimbursements, minus lawful recoveries. Only wages fall under the two-working-day rule in Section 17(2). Gratuity is excluded from the Code's definition of wages and is payable on its own timeline under the Code on Social Security, 2020 (generally 30 days from the date it becomes payable). Statutory bonus has its own timeline too.
- What was the rule before 21 November 2025?
- There was no single statutory deadline for the whole F&F packet. In practice, many employers took 30–45 days or longer to complete a settlement. The two-working-day wage rule is a large, and for many employers still under-known, change.
- What can I do if my employer misses the 2-day wage deadline?
- A written request is a reasonable first step — Kagaz's free written-demand generator drafts one. If that doesn't get a response, a formal F&F Settlement Statement or Salary Non-Payment Legal Notice documents the shortfall in writing. Unpaid wages can be claimed before the authority appointed under Section 45 of the Code on Wages, 2019 (in practice, typically the jurisdictional labour commissioner).
This is a template, not legal advice.
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