The new Labor Code, which came into effect on November 21, 2025, introduces several employee-friendly reforms for both fixed-term and permanent employees. One of the most significant changes is the faster Full and Final (FnF) settlement process.
Under the old system, many companies typically took 30 to 45 days to process FnF payments, leaving employees struggling financially when changing jobs. The new Labor Code aims to address this issue by establishing a strict timeline that all employers must adhere to.
Full and Final Settlements to be Done in 2 Days
The Code on Wages, 2019, one of the four consolidated labor codes, mandates a much faster settlement cycle. According to the new rule, employers must clear the full and final wage within two working days of an employee's departure, whether due to resignation, termination, layoff, or closure.
According to the new labor code, companies must pay the full and final settlement within two working days. Previously, some companies issued the FnF on the last working day, while others made payments within the legal timeframe of approximately 30 days. This is because when an employee leaves a job, several settlements, such as gratuity and leave encashment, must be considered, each of which has its own deadline. Therefore, companies often settle everything at once to ensure they are compliant with the law.
According to Arjun Paleri, partner at BTG Advaya, the new wage code brings uniform rules across all job situations. Under Section 17(2) of the Wage Code, 2019, all employees must receive their final salary—the full Full and Final Settlement (FnF) of salary (excluding certain statutory payments such as gratuity)—within two working days of the last working day.
This rule now:
Covers all forms of separation from employment, including voluntary resignation.
Applies uniformly to all employees regardless of salary level or job category.
Eliminates the previous salary-based limit.
Ashish Philip, Executive Partner at Lakshmikumaran & Sridharan Attorneys, agrees with Paleri and says that under the Code on Wages, employers must now pay the full and final salary within two working days of an employee's resignation, termination, dismissal, or retrenchment, as the case may be, which is significantly shorter than the previous 30-day timeline.
Employees will benefit
For employees, this significant reduction in processing time provides financial security. It also promotes accountability and prevents unnecessary delays that previously affected millions of employees.
Section 17 of the Code on Wages, 2019, provides clear guidelines regarding the timeframe for paying employees' wages. This section specifies how employers should pay employees based on their pay cycle, which can range from daily to monthly payments. It also gives the government the flexibility to adjust payment timelines in certain circumstances, while also taking into account other existing laws that may have different requirements.
Disclaimer: This content has been sourced and edited from Amar Ujala. 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.
-
How much will it cost to get a bedroll in a sleeper coach, and how much will it cost to buy a pillow and blanket?
-
How do you get a second cylinder on your LPG connection? What is the process?
-
JEE Mains 2026: NTA opens JEE correction window today, changes can be made to these options.
-
India's new order! Now, every smartphone will be required to have a government-run cyber safety app. Find out what will change for you.
-
TECH EXPLAINED: What is SIM binding and how will it affect users? Learn everything in simple terms.
