Full & Final Settlement delay

Usually the Full & Final Settlement is 30-45 days after the employee has left the organization.

Are there any compulsory timelines where this process has to be completed by law?
What happens if the 30-45 days deadline is not met by company in any situation?
Any steps the employee can take?

E.g there is a situation for an ex-employee now not received for 3-4 months now and the multiple reason told from lack of funds to covid situation and sell off position etc.

Please suggest.



Dear @MadhuP1,

If I am not wrong, you need to make the full and final settlement by the 7th day of the last working day. Other community members may throw light on this.

If employee is eligible for gratuity, ie. has worked for more than 5 years, then Gratuity needs to be paid within 30 days of the last working day.


Hi @MadhuP1

Agree with @shefalipatil

As of now there is no rigid policy on the same, but soon there is a bill coming under wages act 2020.

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Employee terminated by employer or due to closure of establishment ---- before expiry of 2nd working day
Industries with less than 1000 employees — before expiry of 6th working day
Industries with more than 1000 employees — before expiry of 7th working day
The current act covers only whose salary does not exceed Rs.24000/ for the above specified nature.
Law is silent on the timeline for making payment in case of resignation by employee.


We have to decide first what all the items payable to the exiting employee under the F&F settlement and do the disbursement within the statutory time limit or the time limit fixed in the contract of employment as the case be depending on the status of the employee concerned i.e., workman or otherwise.

Gratuity : Should be paid within 30 days from the date of termination else interest liability would accrue.

Retrenchment Compensation: Exactly at the time of retrenchment failing which the retrenchment would be illegal.

Wages/Salary: Within two working days from the date of termination.

Statutory Bonus: Can be paid after determination of the percentage of bonus at the close of the accounting year.

All other items like surrender leave salary, refund of security deposit, if any etc., may be paid within 30 days from the date of actual separation, to be on the safer side.

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