When you resign in India, your employer must clear every rupee owed to you, your last salary, unused leave, any bonus, gratuity and provident fund. Since 21 November 2025 the law fixes a tight two working day clock for paying out wages on resignation, so you do not have to chase your dues for months.
Quick answer: Full and final settlement, or FnF, is the closing payout an employer makes when you leave a job. It bundles unpaid salary, leave encashment, pro-rata bonus, gratuity if you served five years, and your provident fund. Under the Code on Wages 2019, wages due on resignation must be paid within two working days.
Full and final settlement is the total amount an employer must pay an employee on exit. It clears pending salary, encashed leave, statutory bonus, gratuity and any reimbursements, after adjusting recoveries like notice shortfall or advances. It closes the financial relationship between the two parties.
The governing law is the Code on Wages 2019, notified by the Ministry of Labour and Employment and in force across the country from 21 November 2025. Section 17(2) is the key provision. It states that where an employee has resigned, retrenched, or been removed or dismissed, the wages payable to him shall be paid within two working days of his resignation.
Gratuity is governed by the Payment of Gratuity Act 1972, Section 4, which makes gratuity payable on resignation after not less than five years of continuous service, at the rate of fifteen days wages for each completed year. Statutory bonus rests on the Code on Wages 2019 Chapter IV, with a minimum of eight and one third per cent. Your provident fund sits with the EPFO, which you transfer to a new employer or withdraw online.
If the employer does not pay, the Code itself gives the remedy. Under Section 45 the appropriate Government appoints a claims authority, not below the rank of a Gazetted Officer, to hear and determine wage claims and to award compensation in addition to the dues. A claim can be filed within three years.
Real-life example: Dr. Shrawan Kumar Pathak resigned from a private institute in Patna district on 1 December 2025 after six years of service. His last salary, 18 days of unused leave and gratuity stayed unpaid. He sent a written demand on 10 December quoting the two working day rule under Section 17(2). When the office still delayed, he filed a claim under Section 45 of the Code on Wages 2019 before the district claims authority. His full settlement of ₹2,40,000 was cleared in 38 days, with no lawyer fee.
Under Section 17(2) of the Code on Wages 2019, wages payable on resignation must be paid within two working days of the resignation. In practice companies set a 30 to 45 day FnF cycle, but the statutory wage clock is two working days, which you can cite in your demand.
Yes, if you have completed at least five years of continuous service. Section 4 of the Payment of Gratuity Act 1972 makes gratuity payable on resignation after five years, at fifteen days wages for each completed year based on your last drawn wages.
Yes. If you do not serve the full notice period, the employer can recover the agreed notice pay from your settlement. Always check that only the contractually agreed amount is adjusted and ask for the deduction in writing.
Send a written demand with a deadline. If still unpaid, file a claim before the authority appointed under Section 45 of the Code on Wages 2019. The authority is a Gazetted Officer who can order payment plus compensation, and you have three years to file.
Leave encashment forms part of your settlement and may be taxable depending on whether you are a government or private employee and the amount. Check the current exemption limit on the official income tax portal before assuming it is fully tax free.
Use your UAN on the EPFO member portal to either transfer the balance to your new employer or withdraw it. Keep your KYC, bank details and Aadhaar linked so the online claim is processed without an employer signature.
No. The claim under Section 45 of the Code on Wages 2019 can be filed by the employee directly, by a registered trade union, or by the Inspector-cum-Facilitator. The process is designed to be accessible without legal representation.
Your appointment letter, salary slips, bank statements showing salary credits, the leave balance record, and the FnF statement itself. Together these establish the unpaid amount if you have to file a claim.