Workforce
Two working days for wages, thirty for gratuity. The deadlines are statutory, and "we settle at the end of the quarter" is not one of them.
Check your DPDP readiness — free More on the blogMost disputes with a departing employee are not about the amount. They are about the delay, and about a relieving letter being held hostage to a settlement the employer has not got round to computing. Both of those are avoidable, and one of them has a statutory deadline attached. The four labour codes took effect on 21 November 2025 and replaced the Acts this used to be measured against — the Payment of Wages Act, the Payment of Gratuity Act and the Payment of Bonus Act among them. The deadlines below are the ones in the codes.
Section 17(2) of the Code on Wages, 2019 requires the wages of an employee who has been removed, dismissed or retrenched, who has resigned, or who lost their job because the establishment closed, to be paid within two working days of leaving. Not the next payroll cycle, and not the end of the month. Resignation is the change that catches people out. The Payment of Wages Act spoke of employment being terminated, and settling a resignation at the next payroll run was common practice. The Code names resignation expressly, so a blanket policy of settling everyone at month-end now runs against it.
Under section 53 of the Code on Social Security, 2020, gratuity becomes payable to an employee who has rendered five years of continuous service, on superannuation, retirement, resignation, death or disablement, or the end of a fixed-term contract. The five-year condition does not apply on death, disablement or the expiry of a fixed-term contract, and the Labour Ministry puts the fixed-term minimum at one year. Section 56(3) requires the employer to pay it within 30 days of it becoming payable, and section 56(4) adds simple interest for any delay. The obligation to compute and offer it sits with the employer: section 56(2) makes the employer work out the amount as soon as it falls due, whether or not the employee has asked. Wages for gratuity now follow the Code's definition, so if allowances exceed half of total pay the excess counts. The site's gratuity calculator applies that rule.
There is no single national notice period. It comes from the employment contract, and from the State Shops and Establishments Act that applies to the establishment, some of which set a minimum for employees past a service threshold. A contract cannot go below the statutory floor where one exists, and where none exists the contract is the answer. Recovering pay in lieu of shortfall is a contractual right, so it needs to be in the employment agreement before it is exercised, not asserted afterwards.
No statute obliges an employer to issue a relieving letter, which is precisely why withholding one is so common and so damaging. It costs the employee their next job and it earns the employer a grievance that a conciliation officer will hear sympathetically. Settle the money on the statutory timetable, issue the relieving letter and the full and final settlement statement together, and there is nothing left to argue about.
Two working days for wages. Section 17(2) of the Code on Wages, 2019, in force since 21 November 2025, requires the wages of an employee who has been removed, dismissed or retrenched, or who has resigned, to be paid within two working days of leaving. Gratuity has its own deadline: section 56(3) of the Code on Social Security, 2020 requires payment within 30 days of it becoming payable.
Section 56(4) of the Code on Social Security, 2020 makes the employer liable to pay simple interest from the date the gratuity became payable until the date it is paid. Under section 56(2) the employer has to work out the amount and give notice of it as soon as gratuity becomes payable, whether or not the employee has applied.
Yes, under the Code on Wages, 2019. Section 17(2) names resignation alongside removal, dismissal, retrenchment and closure. The Payment of Wages Act, 1936 it replaced on 21 November 2025 spoke only of employment being terminated, so many employers settled resignations at the next payroll run. That practice no longer fits the Code.
No statute requires a relieving letter, which is why withholding one is common. It is also why doing so is a poor idea: it costs the departing employee their next position and generates a grievance, without giving the employer any right it did not already have. Settlement and the relieving letter are better handled separately.
Only where the employment contract provides for it. Recovery of pay in lieu of an unserved notice period is a contractual right, not a statutory one, so it has to be written into the agreement before it is relied on, and it remains subject to the limits on deductions in the applicable wage legislation.
No. It comes from the employment contract and from the State Shops and Establishments Act applying to the establishment, some of which prescribe a minimum for employees beyond a service threshold. Where a statutory floor exists the contract cannot go below it; otherwise the contract governs.
Published 31 August 2026, updated 24 September 2026. Founder & CEO at VidhiSar. I have watched four companies pay for the same mistake, and it was never the mistake anyone expected. VidhiSar is software, not a law firm: every answer names the section it relies on so you can check it, and anything turning on your specific facts is worth putting to a professional. More about who builds this
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