India’s new labour codes, which came into effect on 21 November 2025, have introduced several important employee-friendly reforms for both fixed-term and permanent workers. One of the most significant changes is the faster and more transparent process for Full and Final (FnF) settlement.
Under the older system, many companies took 30 to 45 days or more to complete the payment of dues. This often caused stress for employees who needed their salary balance, leave encashment, and other pending payments during job transitions. The new rules aim to solve this long-standing issue.
The Code on Wages, 2019, one of the four consolidated labour codes, has introduced a strict requirement for employers. All dues must now be cleared within two working days of an employee leaving a job.
This rule applies in cases of:
This change ensures that employees do not face long delays at a time when they need their funds the most. It also brings more transparency and fairness into exit processes.
The rule has been clearly laid out in Section 17(2) of the Code on Wages. It requires employers to pay all wages, including the complete FnF amount, within two working days of the employee’s exit.
Section 17 also explains the general timelines for wage payments based on different wage cycles such as daily, weekly, or monthly. It allows the government to adjust timelines when necessary, while ensuring that other laws with shorter time limits are respected.
Why Does This Matter for Employees?
The new two-day timeframe brings several benefits for workers:
Employees receive their dues quickly, helping them manage expenses while moving between jobs.
The strict timeline reduces the chance of employers delaying payments without reason.
Faster payments make job changes smoother and reduce financial pressure on families.
Companies must now upgrade their internal processes to meet the two-day deadline. This may include adopting better HR systems, coordinating faster between departments, and improving record-keeping. While this may require some adjustments, it creates a more organised and predictable system for both employers and employees.
Read more: New Labour Codes 2025: How Are Your Salary and Workplace About to Change?
The two-day full and final settlement rule is one of the most impactful reforms under the new labour codes. It promises a faster, fairer, and more transparent system for employees across India. By ensuring quick wage payments, the new framework marks a major step forward in protecting workers’ financial well-being during job transitions.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Published on: Dec 1, 2025, 10:55 AM IST
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