As part of the new wage code enforcement, the government mandated that employers must settle all dues (salary, leave encashment, gratuity/benefits wherever applicable) within two working days of an employee leaving — whether by resignation, termination, retrenchment or closure.
This ends the long-standing practice where employees often waited for weeks or months, especially in SMEs or contract-heavy firms. Many workers welcomed the move as overdue justice; for some, it avoids months of financial uncertainty.
This change brings significant emotional relief for departing employees — often under stress: city transfers, job hunting, family burdens or uncertainty. Cases of people getting stuck without salaries or final dues for months have caused real human hardship in recent years; now, at least on paper, there’s a legal timeline. But for employers and HR teams, the pressure is intense. Two-day F&F means payroll, clearance, asset recovery, benefits, statutory deductions, tax, and final paperwork all must run like clockwork — one slip, and companies risk liability under the new Code on Wages. This is especially tricky when vendors/contractors are involved, or when last-minute resignations coincide with month-end payroll cycles.
From a compliance standpoint, HR must build exit-to-payout pipelines: automated checklists, asset-return stamps, PF/ESI/ECR status verification, final tax forms, and correct pay computations (including overtime, leave dues, bonuses, gratuity if eligible). For firms with large exits or frequent turnover, a separate “exit-sprint” team or automated workflows may be needed. As auditors start tracking compliance with the Codes, any delay could trigger inspection — possibly fines or liabilities. The new requirement upends long-accepted exit norms; companies must treat it as central to payroll governance, not a back-end admin task.
What changes will you make to your off-boarding process so F&F payments happen within 48 hours reliably?
For vendors and contractors, how will you enforce compliance so delayed turnover elsewhere doesn’t block your payouts?
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7This ends the long-standing practice where employees often waited for weeks or months, especially in SMEs or contract-heavy firms. Many workers welcomed the move as overdue justice; for some, it avoids months of financial uncertainty.
This change brings significant emotional relief for departing employees — often under stress: city transfers, job hunting, family burdens or uncertainty. Cases of people getting stuck without salaries or final dues for months have caused real human hardship in recent years; now, at least on paper, there’s a legal timeline. But for employers and HR teams, the pressure is intense. Two-day F&F means payroll, clearance, asset recovery, benefits, statutory deductions, tax, and final paperwork all must run like clockwork — one slip, and companies risk liability under the new Code on Wages. This is especially tricky when vendors/contractors are involved, or when last-minute resignations coincide with month-end payroll cycles.
From a compliance standpoint, HR must build exit-to-payout pipelines: automated checklists, asset-return stamps, PF/ESI/ECR status verification, final tax forms, and correct pay computations (including overtime, leave dues, bonuses, gratuity if eligible). For firms with large exits or frequent turnover, a separate “exit-sprint” team or automated workflows may be needed. As auditors start tracking compliance with the Codes, any delay could trigger inspection — possibly fines or liabilities. The new requirement upends long-accepted exit norms; companies must treat it as central to payroll governance, not a back-end admin task.
What changes will you make to your off-boarding process so F&F payments happen within 48 hours reliably?
For vendors and contractors, how will you enforce compliance so delayed turnover elsewhere doesn’t block your payouts?
Acknowledge(0)Amend(0)
The new wage code presents a challenge, but it's one that can be managed with careful planning and efficient processes. Here's a step-by-step action plan:
1. First, review your current off-boarding process. Identify bottlenecks and areas that may cause delays. This could be anything from the time it takes to calculate final dues to the process of recovering company assets.
2. Implement automation wherever possible. This could include automated checklists, asset-return stamps, and pay computations. Automation can significantly reduce the time taken for these tasks and minimize the risk of errors.
3. Establish a dedicated "exit-sprint" team if you have a high turnover rate or large exits. This team can focus solely on ensuring that all exit formalities are completed within the stipulated time frame.
4. For vendors and contractors, consider incorporating clauses in your contracts that stipulate the timeline for final settlements. This can help ensure that their turnover doesn't affect your payouts.
5. Regularly audit your off-boarding process to ensure compliance with the new wage code. This can help you identify potential issues before they become a problem.
Remember, the key to managing this change is to be proactive rather than reactive. By planning ahead and implementing efficient processes, you can ensure that you're able to comply with the new wage code without causing undue stress for your HR team or your departing employees.
From India, Gurugram
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1. First, review your current off-boarding process. Identify bottlenecks and areas that may cause delays. This could be anything from the time it takes to calculate final dues to the process of recovering company assets.
2. Implement automation wherever possible. This could include automated checklists, asset-return stamps, and pay computations. Automation can significantly reduce the time taken for these tasks and minimize the risk of errors.
3. Establish a dedicated "exit-sprint" team if you have a high turnover rate or large exits. This team can focus solely on ensuring that all exit formalities are completed within the stipulated time frame.
4. For vendors and contractors, consider incorporating clauses in your contracts that stipulate the timeline for final settlements. This can help ensure that their turnover doesn't affect your payouts.
5. Regularly audit your off-boarding process to ensure compliance with the new wage code. This can help you identify potential issues before they become a problem.
Remember, the key to managing this change is to be proactive rather than reactive. By planning ahead and implementing efficient processes, you can ensure that you're able to comply with the new wage code without causing undue stress for your HR team or your departing employees.
From India, Gurugram
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