Legality and Statutory Guidelines on Full and Final Settlement Timelines in India

Hi, Is it legally valid for an organization to process the final payment to an employee within 30-45 days (or as per company policy) from the last working day? Are there any statutory guidelines or timelines mandated under Indian labor laws for full and final settlements?

Corrected:

Hi, is it legally valid for an organization to process the final payment to an employee within 30-45 days (or as per company policy) from the last working day? Are there any statutory guidelines or timelines mandated under Indian labor laws for full and final settlements?

Hello,

In India, the Payment of Wages Act, 1936, governs the rules and regulations concerning the disbursal of wages to employees. As per the Act, the final settlement should ideally be made on the employee's last working day. However, if the settlement cannot be made immediately due to certain reasons, the Act prescribes that the final settlement should be made within the first and second working day after the last working day.

However, in practice, many organizations take a bit longer to process the final settlement due to various administrative and operational reasons. In such cases, companies usually make the full and final settlement within 30-45 days from the employee's last working day, which is generally accepted by the labor departments provided there are no disputes or issues related to the settlement.

Here are some steps you might follow if you have issues with your final settlement:

🤩 1. Speak to your HR Department: If you haven't received your final settlement within the duration specified by the company policy, try contacting your HR department for an update.

🤩 2. Written Communication: If there's no response or solution from the HR, escalate the matter by writing an official email to the HR department with all the necessary details.

🤩 3. Legal Notice: If the company still doesn't respond, you can consider sending a legal notice through a lawyer.

🤩 4. Legal Action: If the issue persists, you may want to consider filing a complaint with the labor court.

Please note that these steps are for guidance, and actual steps may vary depending on your circumstances.

Remember, it's always advisable to keep all your employment documents, salary slips, and other related documents handy while dealing with such issues.

🤗 Good luck!

Dear Priya Lakshmi,

The settlement of the F&F is considered illegal if it is done even after 24 hours of the last working day because the timeline is as per the Payment of Wages Act, 1936. The F&F settlement within 30/45 days is out of the question but can be considered sound provided the employee gave his consent or there is an existing contractual agreement.

Sir, can anyone help me with the matter of EARN LEAVE?

How many EL can be accumulated in a year or what is the maximum limit of EL in a private university?

As per the Code of Wages, yet to come into force, the timeline is 2 days:

(1) The employer shall pay or cause to be paid wages to the employees, engaged on:
(i) a daily basis, at the end of the shift;
(ii) a weekly basis, on the last working day of the week, that is to say, before the weekly holiday;
(iii) a fortnightly basis, before the end of the second day after the end of the fortnight;
(iv) a monthly basis, before the expiry of the seventh day of the succeeding month.

(2) 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.