Labour Law: Often, employees resign from their jobs, yet it takes a considerable amount of time for them to receive their outstanding dues. Are you aware that the government has recently introduced specific amendments to labour laws? According to these new legal regulations, an employee will now receive their full financial settlement within just two days of leaving their job.
Until now, in most instances—whether due to resignation or termination—it would take an employee 40 to 45 days to receive their outstanding dues. This inconvenience is now set to end soon.
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Under the Central Government’s new labour laws, employees will be able to receive their entire financial settlement from their previous employer within two days. They will no longer face prolonged delays. Employees previously faced difficulties due to the 45-day waiting period required to receive their outstanding salary dues.
Understanding the New Rules
Under the regulations now implemented by the government in India, companies are mandated to complete an employee’s “Full and Final Settlement” within a total of two working days. These rules have been brought into effect under the *Code on Wages, 2019*.
According to the new rules, if an employee resigns, is terminated, or if the company ceases operations, the company must clear all outstanding payments due to the employee within two working days. Previously, this process could take anywhere from 30 to 90 days.
What Constitutes a “Full and Final Settlement”?
For an employee, the “Full and Final Settlement” holds significant importance. It entails a comprehensive accounting of all outstanding financial dues payable to the employee upon the termination of their employment. This includes everything from their basic salary to various other allowances and service-related benefits. It specifically covers the employee’s salary for their final month of service.
Additionally, the monetary value of any accumulated or unutilized leave is disbursed as part of this settlement. It may also include performance-based incentives or bonuses, where applicable.
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Key Points Regarding Gratuity
In certain instances, gratuity may now be claimed more readily after completing just one year of service; furthermore, it must be disbursed within 30 days. This regulation offers significant relief to employees, as they will no longer be required to endure a lengthy wait to receive their rightful dues.
