As part of the new wage code, employers are now required to pay their employees the entire and final settlement of earned wages and tax due within two business days of their termination from employment

To comply with the new wage code, an employer must pay all wages and benefits due to a terminated employee within two days after the company terminates their employment, assigns them to another job or removes them from employment.

The current practice of businesses is to pay their employees the entire settlement of salary and dues within 45 days to 60 days from the end of the employee’s last day of work. The maximum period of time that can be extended by this practice is up to 90 days from the date of their termination.


There were four new reforms that were enacted by the Indian Parliament, including pay, social security, labour relations, occupational safety, health, and working conditions.

Under the new labour law, the new wage code provides, “For employees who have been –

(i) discharged or terminated; or (ii) laid off, retrenched, or made unemployed by the closure of the establishment, will be paid in two working days after the termination, dismissal, or reduction if that is the case.”

By combining 29 Central Labour Laws, four new labour codes have been created

As part of the concurrent list, the constitution requires ratification by most states before these regulations can take effect. The government wants these laws in place by July 1.

A few states have not yet been able to establish the labour laws required by the four labour statutes.

A number of states and union territories have yet to release draft guidelines for the Code of Wages, according to Rameshwar Teli’s written response to the Lok Sabha.

Businesses need to rethink the payroll process once the wage code is implemented. They would have to consider the timeliness and procedures for determining the total wage amount within two working days.

Individual states can also establish their timelines for full and final settlements according to what they deem reasonable.

A Government may provide another time limit for the payment of wages, regardless of what is contained in sub-paragraph (1) or (2), if it deems it reasonable to do so given the circumstances in which the wages must be paid.”

A few other changes to the new wage codes will cause employees to work longer hours, contribute greater amounts to the provider’s fund, and see their salaries decrease.

According to new laws, companies can now put in 12 hours of work per day instead of 8-9

They will need to provide three weeks’ vacation to their employees, however.

As a result of the aforementioned changes, the total number of hours you work per week is not going to change, but the number of working days will be cut in half. In general, 48 hours of work per week are mandated by the new wage code.

Because the new wage code provides a basic salary of at least 50% of the monthly gross salary, workers will also have more money to take home.

As a consequence

Employees and employers will have to pay more in PF contributions, affecting employees’ take-home pay more than anyone else.

Retirement and gratuity amounts will increase under the new labour laws.

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Banibrata Chakraborty

Creative and driven journalist with 1+ years of experience. Great storytelling skills and a nose for the truth as well as an excellent track record as a staff reporter in print and digital media. Seeking to leverage skills and experience to contribute to high quality journalism at any company


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