Quit Your Job? You Must Get Your Final Salary In 2 Days Now — New Rule Explained

Last Updated:March 26, 2026, 09:30 IST

From April 1, 2026, a key provision of India’s new labour codes framework will change how employees exit their jobs

Exit rules under new labour codes

From April 1, 2026, a key provision under India’s new labour law framework is set to significantly change how employees exit their jobs. Companies will be required to complete an employee’s full and final (F&F) settlement within two working days of their last working day—a sharp shift from the weeks-long timelines that have traditionally been the norm.

The rule, part of the broader labour code reforms under the Code on Wages, applies across all types of separations, including resignation, termination and layoffs. It aims to ensure faster disbursal of dues such as pending salary, leave encashment, bonuses and other payments owed to employees.

What has changed?

Until now, there has been no strict, uniformly enforced timeline for F&F settlements, often leading to delays stretching into weeks or even months.

“Currently, final wage settlements typically take several weeks after an employee’s last working day, sometimes extending to months,” Paleri said.

The new rule seeks to standardise the process by mandating that employers settle dues within two working days, improving transparency and reducing disputes.

Why this matters for employees

For employees, particularly those transitioning between jobs, delays in receiving final payouts can disrupt financial planning.

“Such prolonged settlement periods significantly impact employees’ financial planning during career transitions. The new rule requires employers to settle final wages within two working days after the last working day—much faster than current practices. This eliminates prolonged waiting periods and is highly beneficial for employees,” Paleri added.

Echoing this view, Asish Philip, Executive Partner at Lakshmikumaran and Sridharan Attorneys, said the reform marks a significant departure from earlier norms.

“Under the Code on Wages, full and final wages must now be disbursed by employers within two working days of an employee’s resignation, removal, dismissal or retrenchment, as the case may be. This is a significant reduction from the earlier 30-day timeline for full and final settlement,” he said.

Challenges for companies

While the rule is clearly employee-friendly, it may pose operational challenges for companies, especially those with complex payroll and exit processes.

F&F settlements typically involve multiple steps—verification of attendance, calculation of leave balances, variable pay adjustments, tax deductions, and clearances from departments such as IT, finance and administration. Compressing all of this into a two-day window will likely require companies to overhaul internal systems and workflows.

Automation, better coordination across departments and streamlined exit processes will become critical to ensure compliance and avoid delays.

What about variable pay and disputes?

One key area of uncertainty is how companies will handle components such as performance bonuses, incentives or disputed claims that may not be immediately quantifiable.

Experts suggest that while fixed components may be settled within the two-day timeline, certain variable elements could still be processed separately, depending on company policies and further regulatory clarity.

Impact across sectors

The new rule is expected to have a broader impact in sectors with high employee turnover, such as IT services, startups, retail and gig-based roles. Faster settlements could improve employee experience and reduce friction during exits.

However, smaller firms and MSMEs may face initial challenges in adapting to tighter timelines, particularly where processes are still manual.

The bottom line

The two-day F&F settlement rule marks a significant shift towards faster, more transparent employment practices. While it strengthens employee rights and addresses a long-standing pain point, its success will depend on how effectively companies can adapt.

If implemented well, this reform could finally put an end to one of the most common workplace grievances in India—waiting indefinitely for your final salary after leaving a job.

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