The Code on Wages, 2019 establishes clear salary payment deadlines that employers must follow. According to reports from Mint, monthly salary payments must be completed before the expiry of the seventh day of the succeeding month. Weekly-paid employees must receive wages before the last working day of the week, while fortnightly-paid employees are entitled to payment within two days after the end of the fortnight. Daily-rated employees receive wages at the end of the workday. The latest developments show that employers must pay salaries by the seventh day of the following month under the new labour code framework, with the most significant change being the two-working-day requirement for final settlements when employment ends.
The new legislation mandates that employers pay all wages due within two working days when an employee resigns, is dismissed, removed or retrenched. As reported by Mint, this provision ensures that employees receive their full compensation quickly during employment transitions. The Code also requires employers to issue wage slips in either physical or electronic form on or before the payment of wages. The latest developments confirm that employees who leave a job are entitled to receive their final dues within two working days under the new regulatory framework, though this should not be misunderstood as meaning every component of exit settlement will be processed within 48 hours.
Employees often use the expression 'full and final settlement' as if it refers to one simple payment, but in reality, it is a comprehensive reconciliation exercise. The final settlement may include salary for days worked, leave encashment, approved reimbursements, bonus or incentives, notice period adjustments, recovery of loans or advances, tax deductions and statutory benefits such as gratuity. Different components may be governed by different laws, company policies or contractual terms, with gratuity having its own statutory timeline, PF transfer requiring separate processes, and bonus or incentives depending on scheme rules. Leave encashment may need separate review, and in certain cases involving workers, the labour framework provides specific treatment for wages in lieu of leave.
Employees should not treat full and final settlement as an HR formality that begins after resignation, but prepare before their last working day. As recommended by The Times of India, employees should check whether the last month's salary has been correctly recorded, whether leave balances are accurate, whether expense claims have been submitted, whether there is any notice period shortfall, whether company assets have been returned and whether any loans, advances or recoveries are outstanding. It's useful to keep copies of resignation acceptance, last payslips, reimbursement submissions, asset return acknowledgements, leave balance confirmation and final settlement statements. Job change is also a good moment to review nominations for wages and other employment-related dues, as outdated or incomplete nominations can create delays and administrative complications.
The Code on Wages extends wage payment protections to all employees irrespective of their salary, replacing the earlier framework that applied only up to a specified wage ceiling. According to Mint reports, the law provides employees with a three-year limitation period for filing claims if wages are delayed or unauthorised deductions are made. The legislation emphasizes transparency in deductions, with settlement statements clearly showing what has been paid and what has been deducted. For example, if notice pay is deducted, the employee should know whether the deduction is based on the employment contract, company policy or resignation terms. The code introduces the role of Inspector-cum-Facilitators to help resolve wage-related complaints and claims, ensuring better enforcement of wage payment provisions.
