Full and Final settlement timeline under new labour codes: What employees should know

The new labour codes that came into effect on November 21, 2025, have introduced several employee-friendly reforms for both fixed-term and permanent workers.

One of the most impactful changes is the faster Full and Final (FnF) settlement process.

Under the older system, many companies typically took 30 to 45 days to process FnF payments, leaving employees financially stressed during job transitions.

The new labour codes aim to fix this by establishing a strict timeline that all employers must follow.

2-day full and final settlement rule

This creates a more transparent and employee-supportive system, ensuring workers receive their dues promptly at a crucial transition point.

What the law says

The requirement is clearly stated in sub-section (2) of Section 17 under “Time limit for payment of wages”: "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."

This clause mandates that in cases of removal, dismissal, retrenchment, resignation, or unemployment due to establishment closure, the wages payable, including the entire FnF, must be settled within two working days.

Why this matters for employees