Now, companies must take this immediate action the moment an employee leaves their job; new labour rules bring significant relief to employees...

New Labour Codes: There is welcome news for the millions of employees working across the country. Notably, employees will no longer have to endure long waits to receive their dues after leaving or losing a job. According to the new labor regulations, companies are now required to complete an employee's Full and Final (FnF) settlement within just two working days. This means that if an employee resigns, is terminated, or if the company ceases operations, the company is legally obligated to pay out all outstanding dues within two days.

Until now, this process has often been quite lengthy in most companies. Employees frequently had to wait anywhere from 30 to 45 days—and in some instances, up to 90 days—to receive their money. This often created difficulties for individuals in meeting daily expenses, such as rent, utility bills, and other essential needs. However, with the implementation of these new rules, this issue is expected to be resolved to a significant extent. These regulations have come into effect as of April 1, 2026.

What constitutes a Full and Final Settlement?
A Full and Final Settlement refers to the comprehensive calculation and payment of all monetary dues owed to an employee upon the termination of their employment. This encompasses not only the basic salary but also several other components, such as:

The final month's salary (calculated based on the actual number of days worked)
Encashment of accumulated leave/vacation days
Performance-based bonuses or incentives
Reimbursement of office-related expenses (e.g., travel costs)
Deductions for taxes, salary advances, outstanding loans, or company property

While the settlement period may extend up to one month under certain specific circumstances, the two-day rule will generally apply in standard cases.

Major Changes Regarding Gratuity

The new labor codes also introduce significant relief concerning gratuity payments. Previously, employees were required to complete a minimum of five years of service to become eligible for gratuity; however, they can now avail themselves of this benefit after completing just one year of service. Companies are required to disburse this payment within 30 days.

Thus, these new regulations are poised to prove highly beneficial for employees. This will reduce financial pressure when changing jobs, and people will not have to wait a long time for their money.

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