New Labour Codes: Companies Can No Longer Withhold Your Salary Upon Resignation—Full Payment to Be Credited to Your Account Within 2 Days..

Changing jobs or leaving one's employment for any reason is a common part of every working professional's career. However, retrieving their own hard-earned money from a former employer often proves to be an arduous and frustrating task for employees. Under the previous system, employees frequently had to endure a long wait—ranging from 40 to 45 days, and sometimes even up to 90 days—to receive their Full and Final (FnF) settlement. During this period, experiencing financial strain and mental stress was a common occurrence. However, this old and exhausting system is now set to change. Under the government's new labor laws, employees will now receive all their outstanding dues within just two working days of leaving their job.

**The 45-Day Hassle Ends: Settlements Now Processed in Just 2 Days**
Previously, whenever an employee resigned or was terminated by a company, the settlement process—often under the guise of administrative paperwork—would drag on for months. Employees would find themselves caught in a bind, torn between the pressure of starting a new job and the necessity of making repeated rounds to their former company's HR department. Waiting more than 45 days to receive their salary had a direct and adverse impact on their household budgets. However, the landscape is now poised to change completely. The new rule, set to come into effect on April 1, 2026, will provide immense relief to the salaried class. According to the new provisions, regardless of the circumstances under which an employee departs, it will be mandatory for the company to settle all outstanding dues within just two working days of their exit. This ensures that employees will no longer have to feel beholden to their former employers merely to access their own accumulated earnings.

**What Exactly Is This New Labor Law?**
This significant change has been introduced under the 'Code on Wages, 2019.' The scope of this new legislation encompasses every scenario in which an employee's tenure with a company comes to an end. Whether you have voluntarily resigned of your own accord, been terminated for specific reasons, or if the company itself has ceased operations for any cause, in every instance, the full settlement of your outstanding dues is now guaranteed to be processed within two working days. This simply means that companies can no longer hold up files for weeks on end under the pretext of completing accounts. This legislation makes employees' rights stronger and more secure than ever before.

What is included in the Full and Final (FnF) settlement list?
When we speak of a Full and Final settlement, it implies more than just your salary for the last month. It encompasses several other significant components that the company is now legally obligated to disburse within a stipulated timeframe:

Final Salary: The full salary corresponding to the number of days you worked up until your last working day.

Unused Leave (Leave Encashment): The cash equivalent for any leave days you did not utilize during your tenure with the company.

Bonuses and Incentives: Any pending bonuses will be determined based on your performance and in accordance with the company's policies.

New Gratuity Rule: In certain specific instances, the provision for gratuity now applies even after just one year of service. As per the regulations, this payment must be made within 30 days. This serves as an additional financial safety net for employees.

Reimbursements: Any expenses incurred for official travel or other work-related purposes—which you initially paid for out of your own pocket—will also be reimbursed as part of this settlement.

Necessary Deductions: From this total settlement amount, necessary deductions—such as taxes, any previously drawn salary advances, outstanding loans in your name, or penalties for the non-return of company assets (e.g., laptops, ID cards)—will be adjusted at this stage.

Disclaimer: This content has been sourced and edited from TV9. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.