2-day full and final settlement post employee’s resignation now mandatory under Labour Codes — What it means for employers
India’s new Labour Codes mandate that employers must complete full and final settlement within two working days of an employee’s exit. Experts explain how the Code on Wages changes long-standing norms, what challenges companies may face, and how HR systems must evolve to meet compliance.
India’s long-awaited Labour Codes, formally notified and now in the implementation phase, are set to fundamentally reshape workplace norms across sectors. Among the most consequential changes is the mandatory two-day timeline for employers to complete full and final (F&F) settlement when an employee leaves a company.
For decades, employees routinely waited 45 to 60 days, and sometimes even longer, for salary dues, leave encashment, and other payouts. The new provision, introduced under Section 17(2) of the Code on Wages, 2019, seeks to end this practice by requiring all dues to be cleared within two working days of resignation, termination, retrenchment, or closure of the establishment.
