From April 1, 2026, companies in India will be required to complete an employee’s full and final (F&F) settlement within two working days of their last working day. This marks a major shift from the current system, where employees often wait weeks to receive their dues. The rule, introduced under the Code on Wages, will apply to all types of exits, including resignations, terminations, and layoffs, and aims to ensure faster and more structured payouts.

Why This Change Matters

The new rule is expected to significantly benefit employees by removing delays in receiving payments such as pending salary, leave encashment, bonuses, and other dues. Faster settlements will help individuals manage finances better during job transitions, reducing uncertainty and financial stress. It also brings greater transparency and accountability into the exit process, which has long been a concern for workers across sectors.

Challenges for Companies

While the reform is employee-friendly, it will require companies to overhaul their internal processes. F&F settlements involve multiple steps, including attendance checks, leave calculations, tax adjustments, and approvals from various departments. Compressing all of this into a two-day window will demand stronger coordination, faster approvals, and increased reliance on automation to avoid delays and compliance risks.

What Lies Ahead

The impact of this rule will be most visible in industries with high employee turnover such as IT, startups, retail, and gig-based roles. Although fixed components of salary may be settled quickly, some elements like performance incentives or disputed claims may still need separate processing. Overall, if implemented effectively, this reform could eliminate one of the most common workplace issues in India — long delays in receiving final salary after leaving a job.