Every Employee Will Get 100% Salary, Full & Final Settlement Within 2 Days Of Resigning: New Wage Code Rules

Reportedly, India’s New wage code 2022 is here after the announcement made during the 2021 Union Budget. 

New Wage Code

It seems that the much-anticipated four labour codes on wages, social security, industrial relations, and occupational safety, health, and working conditions are making headlines again.

After more than a year and a lengthy delay beyond the expected April 2022 roll out deadline. 

Basically, this New wage code is an attempt by the government of India to simplify the various regulations related to wages.

According to this New Wage Code, a company has to pay the due salary and full and final settlement of wages within two days of the last working day of the employee. 

 In case of resignation, dismissal or removal from employment and services, the dues will have to be paid by the company in two days, as per the new rules. 

Presently, most of the companies take 45 days to 60 days to process the full and final settlement. 

It can be considered as a common practice followed by most of the firms. 

But, now this is all set to change with the new wage code in place. 

What Does New Wage Code Say? 

According to this new wage code, “Where an employee has been – (i) removed or dismissed from service; or (ii) retrenched or has resigned from service, or became unemployed due to closure of the establishment, the wages payable to him shall be paid within two working days of his removal, dismissal, retrenchment or, as the case may be, his resignation.” 

If the Modi government implements four labor codes on wages, social security, industrial relations and occupation safety, health and working conditions, there could be significant changes in salary restructuring, PF and gratuity component, working hours, and Earned Leaves, as per the media reports. 

After implementation of these labor codes, this new wage code will have an impact on all of the previously mentioned factors. 

Basically, these all are still early speculations as nothing concrete should be inferred until the government formally announces the rules.

So far, 23 states have pre-published draft rules on these laws.

Earlier, the Center completed the process of finalizing draft rules on these codes in February 2021. 

Prior to this, the central government notified four labor codes, namely the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health, and Working Conditions Code, 2020, on August 8, 2019.