Full and final settlement in how many days under new wage code (2024)

India’s new labour reforms directs a company to pay that the full and final settlement to employees within two days of an their last working day.

The full and final settlement consist of clearance of dues towards an employee upon their exit from the company. It includes the salary drawn, leave encashment, reimbursem*nts, variables etc.

Currently, the full and final settlement of salary and dues is done after 45 days to 60 days from an employee's last working day, and in some cases, it goes up to 90 days.

The new wage code states that a company must pay the full and final settlement of to employees within two days of an their last working day.

As per the law, “Where an employee has been - (i) removed or dismissed from service; or (ii) retrenched or has resigned from service, or became unemployed due to closure of the establishment, the wages payable to him shall be paid within two working days of his removal, dismissal, retrenchment or, as the case may be, his resignation."

Also read: New Wage Code: Here are 5 things that salaried employees need to know

The Centre's four labour codes on wages, social security, industrial relations and occupation safety, health and working conditions are likely to be implemented soon.

The four codes, if implemented, will drastically alter the way industrial houses treat their employees and also impact the working hours, take home salary and other rights of employees. For instance, once the wages code comes into force, there will be significant changes in the way basic pay and provident fund of employees are calculated

Also Read: How your salary structure can change with the new wage code

In 2019 and 2020, 29 central labour laws were amalgamated, rationalised and simplified into four labour codes, viz, the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health & Working Conditions Code, 2020, noted the Survey.