Labor Law Update: Companies Must Pay Outstanding Dues Within 2 Days If You Leave Your Job

G GOWTHAM
The new Labor Code, effective November 21, 2025, has introduced several employee-friendly reforms designed to protect workers’ rights and ensure timely payments. One of the most significant changes relates to the payment of outstanding salary and benefits when an employee resigns or is terminated.

Key Change: Timely Payment of Dues

  • Rule: If you resign, retire, or are terminated, your employer is now required to settle all outstanding dues within 2 working days.
  • Applicable To: Both fixed-term employees and permanent employees.
  • Outstanding Dues Include:
    • Pending salary
    • Gratuity (if applicable)
    • Earned leave encashment
    • Any other allowances or reimbursements
Why This Change Matters

Financial Security for Employees

No more waiting weeks or months to receive salary or benefits after leaving a job.

Reduces Legal Disputes

Timely payments reduce the risk of employees filing complaints or labor court cases.

Boosts Transparency

Employers are now legally bound to clear all pending dues promptly, ensuring fairness.

How This Will Work in Practice

Final Settlement Process

Upon resignation or termination, the employer calculates pending salary, leave encashment, and other dues.

Payment must be processed within 2 working days.

Payment Method

Dues should be paid via bank transfer or other documented methods for transparency.

Non-Compliance Consequences

Employers who delay payments may data-face penalties under the labor code, and employees can file complaints with the labor department.

Key Takeaway

The new labor law ensures that employees no longer have to wait weeks for pending payments after leaving a job. With dues payable within 2 working days, financial security and transparency for workers are significantly strengthened.

 

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.

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