New Labour Codes: Get Your Full & Final Settlement in 2 Days by 2026!

• New labour codes mandate full and final (FnF) settlements within two working days of an employee's last day, effective April 1, 2026.
• This reform addresses the long-standing issue of employees waiting weeks or months for their dues after resignation or termination.
• The Code on Wages, 2019, consolidates 29 existing labour laws, governing wages, social security, industrial relations, and working conditions.
• FnF settlement includes final salary, leave encashment, bonuses, gratuity (eligible after one year in some cases), and reimbursements.
• Employers can make deductions for taxes, salary advances, company loans, notice period shortfalls, or unreturned assets.

Key Questions Answered

How will new labour codes impact employee resignations?

New labor codes, effective April 1, 2026, mandate that companies must complete an employee's full and final settlement within two working days of their last day.

What are the key components of an FnF settlement?

Key components of a full and final (FnF) settlement include the final salary calculated on a pro-rata basis, unused leave encashment, applicable bonuses and incentives, and gratuity.

When do these new FnF rules become effective?

The new FnF rules became effective on April 1, 2026.