The deadline
The Code on Wages requires wages due to an employee who is removed, dismissed, retrenched or who resigns to be paid within two working days of leaving. Gratuity, if due, is paid within 30 days. Plan the settlement before the last working day, not after it.
What goes into it
| Add | Deduct |
|---|---|
| Salary for the days worked in the last month | Notice pay for notice not served (if the contract provides for it) |
| Unused earned leave, encashed | Outstanding loans and salary advances |
| Gratuity, if eligible (calculation) | Unreturned company assets, at the value the policy sets |
| Bonus, reimbursements and incentives due | Tax on the settlement (TDS) and statutory deductions on the salary part |
| Retrenchment compensation, where applicable | Recoveries the employee has agreed to in writing |
The Code allows only permitted deductions, and all deductions in a wage period together cannot exceed 50% of wages. Recover anything else separately.
The exit checklist
- Record the resignation or termination, the notice period and the agreed last working day.
- Collect company assets and revoke system access on the last day.
- Mark the exit on the EPFO portal so the employee can withdraw or transfer PF.
- Pay the settlement and give a settlement statement.
- Issue the relieving and experience letters, and the annual TDS certificate (Form 130) after the year ends.
WebHR runs exits from HR Operations → Exit Management through to Finance → Final Settlements: it works out salary for the days worked, leave encashment, gratuity and notice recovery, adds other earnings you enter, and shows the working on the statement. The exit deactivates the employee’s access on the last working day.
Due dates
| What | When | How often |
|---|---|---|
| Full and final settlement | Within 2 working days of the last working day (gratuity within 30 days) | Event-based |
If a due date falls on a holiday, the authority’s own rule for the next working day applies. Full compliance calendar
References
Related
Plain-language guidance for HR teams, not legal advice. Checked against the sources above on 29 September 2026; the notification or your authority’s portal is final. Spotted something out of date? Tell us.