Resigned? Here's what labour laws say about final settlement

Published 23 July 2026 · india

One of the less discussed changes under the new labour framework relates to the timeline for payment of wages when employment comes to an end

One of the less discussed changes under the new labour framework relates to the timeline for payment of wages when employment comes to an end. What changes under the Labour Codes? Full and final settlement is not one single payment Different components of exit settlement Does two working days mean everything will be paid immediately? Why two employees may have different exit experiences What employees should do before the last working day Why deductions need to be transparent The overlooked issue: nominations for wage dues How different situations matter for employees and families When should employees update nominations? Key takeaways for employees The bottom line (The author, Puneet Gupta is Partner, People Advisory Services Tax at EY India) You have a new job. But what about the money owed by the old one?Changing jobs is usually associated with excitement. There may be a better role, higher salary, new city, new team or simply a fresh start. But between leaving one organisation and joining another, many employees face a practical concern that does not always get enough attention: when will the previous employer release the final dues?For an employee, the last salary from the previous organisation is not just a payroll entry. It may be needed for rent, relocation expenses, family commitments, education fees, loan repayments or simply to manage the gap before the first salary from the new employer. Yet, for many employees, full and final settlement has often been one of the most uncertain parts of the exit process.An employee may serve the notice period, complete handover, return the laptop, submit the access card and attend the exit interview. Even then, the final payment may take several weeks. Sometimes the delay is because of payroll cycles. Sometimes leave balances, reimbursements, recoveries or approvals are still being checked. In some cases, employees do not receive a clear explanation of what is pending.This is where the Labour Codes could make a practical difference.One of the less discussed changes under the new labour framework relates to the timeline for payment of wages when employment comes to an end.The broad principle is simple: employees should not have to wait indefinitely for wages that have already been earned.Under the wage-related provisions, wages payable to an employee on resignation, removal, dismissal, retrenchment or closure of an establishment are required to be paid within two working days. For employees, this could be a meaningful shift. It may not sound as dramatic as a new social security benefit or a change in salary structure, but it directly affects the employee experience at the time of exit.However, this should not be misunderstood. The exact position will depend on when the relevant provisions are notified and become operational. Also, the two-working-day timeline does not mean that every amount connected with employment separation will automatically be paid within two working days.