New Wage Code: Pay Full And Final Settlement Within 2 Days of Resignation

According to the new wage code, a company must pay an employee’s full and final settlement of earnings and dues within two days of their last working day following their resignation, dismissal, or departure from employment and services. Businesses often pay the full settlement of salaries and other obligations 45 to 60 days after an employee’s last day of work, and in some situations, up to 90 days afterwards.

The four labour codes—pay, social security, labour relations, occupational safety, health, and working conditions—are India’s most recent reform, which the parliament has already approved. The new wage code under the labour law states that “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” when an employee has been (i) removed or dismissed from service; or (ii) retrenched or has resigned from service, or (iii) became unemployed due to closure of the establishment.”

Although the government wants to put these new laws into force by July 1, many states have not yet ratified them, which is required under the constitution because labour is on the concurrent list.

In his written reply to the Lok Sabha, Minister of State for Labour and Employment Rameshwar Teli stated that only 23 states and union territories (UTs) had made the draught Code on Wages guidelines accessible.

However, the code also permits each state to determine its own full and final settlement schedule in accordance with what its state governments deem to be acceptable.

The newly established wage laws stipulate a number of additional changes that will cause employees’ work hours, PF (Provident Fund) contributions, and take-home pay to increase.

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