Full and final settlement of wages rule change delayed

New labour laws regarding the full and final settlement of wages will be delayed. The new rule was expected to be implemented from July 1.

The new labour law condensed the previous 29 laws to form four codes with a set of changes including the wage code. The new rule said an employee should be paid their full and final settlement within two days of leaving a company. As of now, it takes between 15 to 60 days to pay the complete settlement of wages. Some companies delay this for up to 90 days.

The new code stated, "where an employee has been - (i) removed or dismissed from service; or (ii) retrenched or has resigned from service, or became unemployed due to closure of the establishment, the wages payable to him shall be paid within two working days of his removal, dismissal, retrenchment or, as the case may be, his resignation."

This does not include the provident fund payout. Wage refers to remuneration in the form of salary and allowances. The new law will help people who serve long notice periods ranging from one to six months. These people are forced to wait a long duration to be paid their remaining salary.

New labour laws were passed by the parliament and were set to be implemented on July 1. They are now being delayed as the states are yet to fully draft rules using broader guidelines that pertain to pay, social security, labour relations, occupational safety, health, and working conditions.