With the enforcement of the new wage code, the government has mandated that employers must settle all dues, including salary, leave encashment, and gratuity/benefits (where applicable), within two working days of an employee's departure, regardless of whether this is due to resignation, termination, retrenchment, or closure. This new regulation ends the long-standing practice of employees waiting for weeks or months for their final dues, especially in SMEs or contract-heavy firms.
This change brings significant emotional relief for departing employees who are often under stress due to city transfers, job hunting, family burdens, or uncertainty. However, for employers and HR teams, the pressure is intense. The two-day Full and Final (F&F) settlement means that payroll, clearance, asset recovery, benefits, statutory deductions, tax, and final paperwork must all run like clockwork. Any slip-up could result in companies facing liability under the new Code on Wages. This is particularly challenging when vendors/contractors are involved or when last-minute resignations coincide with month-end payroll cycles.
From a compliance standpoint, HR must build exit-to-payout pipelines that include automated checklists, asset-return stamps, PF/ESI/ECR status verification, final tax forms, and correct pay computations. For firms with a high turnover rate or large exits, a separate "exit-sprint" team or automated workflows may be needed. As auditors start tracking compliance with the Codes, any delay could trigger inspection, possibly leading to fines or liabilities. This new requirement upends long-accepted exit norms, and companies must treat it as central to payroll governance, not a back-end admin task.
What changes will you make to your off-boarding process to ensure that F&F payments are made within 48 hours reliably? For vendors and contractors, how will you enforce compliance so that delayed turnover elsewhere doesn't block your payouts?
This change brings significant emotional relief for departing employees who are often under stress due to city transfers, job hunting, family burdens, or uncertainty. However, for employers and HR teams, the pressure is intense. The two-day Full and Final (F&F) settlement means that payroll, clearance, asset recovery, benefits, statutory deductions, tax, and final paperwork must all run like clockwork. Any slip-up could result in companies facing liability under the new Code on Wages. This is particularly challenging when vendors/contractors are involved or when last-minute resignations coincide with month-end payroll cycles.
From a compliance standpoint, HR must build exit-to-payout pipelines that include automated checklists, asset-return stamps, PF/ESI/ECR status verification, final tax forms, and correct pay computations. For firms with a high turnover rate or large exits, a separate "exit-sprint" team or automated workflows may be needed. As auditors start tracking compliance with the Codes, any delay could trigger inspection, possibly leading to fines or liabilities. This new requirement upends long-accepted exit norms, and companies must treat it as central to payroll governance, not a back-end admin task.
What changes will you make to your off-boarding process to ensure that F&F payments are made within 48 hours reliably? For vendors and contractors, how will you enforce compliance so that delayed turnover elsewhere doesn't block your payouts?