Most of it within two working days. Section 17(2) of the Code on Wages 2019 requires wages due to an employee who is removed, dismissed, retrenched or resigns to be paid within two working days, and section 32(1)(vi) of the OSH Code 2020 sets the same deadline for wages in lieu of accrued leave. Gratuity, where it is payable, is due within thirty days; bonus follows within eight months of the year's end.
What is due, and by when
Each head of the settlement has its own statute and its own clock, and the contractor, as the worker's employer, owes all of them. The timeline for a worker who leaves a contractor's employment:
| Head | Deadline | Source |
|---|---|---|
| Wages to the last day worked | Within two working days of removal, dismissal, retrenchment or resignation | Code on Wages s.17(2) |
| Wages in lieu of accrued leave | Before the end of the second working day; within two months on superannuation or death | OSH Code s.32(1)(vi) |
| Notice pay on retrenchment | One month's written notice, or wages for that month in lieu | IR Code s.70(a) |
| Retrenchment compensation | At the time of retrenchment | IR Code s.70(b) |
| Re-skilling fund credit on retrenchment | Credited to the worker within forty-five days | IR Code s.83(3) |
| Gratuity | Within thirty days of becoming payable, with interest after that | SS Code s.56(3) and (4) |
| Bonus for the year | Within eight months of the close of the accounting year | Code on Wages s.39 |
The two-working-day items are the ones most often missed, because payroll treats the final settlement as part of the next monthly run. Section 17(1) lets a monthly-rated worker be paid up to the seventh day of the following month; section 17(2) takes that allowance away the moment the worker leaves. A contractor that settles exits with the monthly payroll is late on every exit that falls before the last few days of the month.
Resignation against retrenchment: a worked example
What the worker is owed depends on how the employment ends, and retrenchment adds three payments that resignation does not. Take a worker with three years and seven months of continuous service with the contractor, a monthly wage of ₹15,600 and twelve days of accrued leave. The wage is a round figure chosen to divide cleanly, not a rate this site quotes. At one twenty-sixth of the monthly wage, a day's wage is ₹600.
| Head | Worker resigns | Worker is retrenched |
|---|---|---|
| Wages to the last day | Due within two working days | Due within two working days |
| Twelve days' accrued leave | ₹7,200 within two working days | ₹7,200 within two working days |
| Notice pay | None | ₹15,600 if a month's notice was not given |
| Retrenchment compensation | None | ₹36,000: fifteen days' pay for each of four counted years [VERIFY: average-pay basis] |
| Re-skilling fund | None | ₹9,000, fifteen days' last drawn wages, paid by the employer into the fund |
| Gratuity | None: under five years | None: under five years |
| Bonus | For the year's wages, within eight months of year end | For the year's wages, within eight months of year end |
Three details in that table come straight from the text. Section 70(b) of the IR Code counts "every completed year of continuous service or any part thereof in excess of six months", so three years and seven months counts as four. Retrenchment compensation is fifteen days' average pay, and average pay is defined in the Code, not simply the monthly wage over twenty-six; the ₹36,000 assumes the two come to the same thing. And retrenchment is not one of the exceptions to the five-year rule for gratuity, so a retrenched worker with under five years' service gets none.
Gratuity: when five years is not needed
On death, disablement, and the end of a fixed term. Section 53(1) of the Code on Social Security 2020 makes gratuity payable after five years' continuous service, and its second proviso says the five years "shall not be necessary" where employment ends through death, disablement or "expiration of fixed term employment". The rate is fifteen days' wages for every completed year or part over six months, based on the wage last drawn; for a monthly-rated employee, Explanation 3 fixes that as the monthly wage divided by twenty-six and multiplied by fifteen. Fixed-term and deceased employees are paid pro rata.
The payment mechanics are in section 56. The employer must work out the amount "as soon as gratuity becomes payable", whether or not the worker has applied, give written notice of it to the worker and to the competent authority, and pay within thirty days. After thirty days simple interest runs from the date gratuity became payable, unless the delay is the employee's fault and the authority has given written permission. Where the amount is disputed, the employer deposits what it admits with the competent authority.
When the site's contract with the contractor ends
Whether anything is owed depends on what happens to the worker's own employment, not on the site's contract. If the contractor keeps the worker and deploys them elsewhere, nobody has left and nothing falls due. If the contractor ends the worker's employment, the question is which kind of ending it is.
Section 2(zh) of the IR Code defines retrenchment as termination "for any reason whatsoever", but excludes, among others, termination through "non-renewal of the contract of employment" on its expiry, termination under a stipulation in that contract, and the end of a fixed term. A worker hired by the contractor for the length of one site engagement, with a written contract saying so, may fall within an exclusion; a worker on an open-ended contract who is let go because one site closed may be retrenched. Which applies turns on the worker's own contract of employment, and that is a question for the contractor's and the site's counsel, not a payroll decision.
What the principal employer should check
That each exit was settled on time, because the site is the fallback for unpaid wages. Section 55(3) of the OSH Code makes the principal employer liable for wages a contractor fails to pay, recoverable from the contractor by deduction from amounts payable under the contract or as a debt. Whether leave wages, notice pay or retrenchment compensation count as wages for that purpose is for the site's own counsel. The checks cost little:
- Get an exit list every month. Every worker who left the crew, the date, and the reason recorded: resignation, dismissal, retrenchment, end of contract.
- Check the settlement dates. The bank credit for the final wages and leave wages should fall within two working days of the exit date. A credit on the seventh of the following month is late.
- Reconcile leave paid against the leave register. The accrued leave on the Form XX register at exit should match what was paid in lieu.
- Ask about every retrenchment. Notice or notice pay, compensation at the time of retrenchment, and the fifteen days' contribution to the re-skilling fund.
- Settle the contractor's final bill last. At the end of an engagement, section 55(3)'s recovery route runs through amounts still payable under the contract, so evidence of settlement before the last payment keeps that route open.
How Velura Services helps
Velura settles leaving workers' wages, leave wages and other dues within the statutory timelines and issues an experience certificate on request. Your site receives a record of each settlement, so the site has evidence each worker was settled.
Sources
- The Code on Wages, 2019 (Act 29 of 2019), Gazette text hosted by the Ministry of Labour and Employment — s.17(1) (time limits for payment of wages by wage period), s.17(2) (two working days on removal, dismissal, retrenchment, resignation or closure), s.26 (bonus eligibility), s.39 (bonus within eight months of the close of the accounting year). Opened and read.
- Occupational Safety, Health and Working Conditions Code, 2020 (Act 37 of 2020), Gazette text hosted by DGFASLI — s.32(1)(vi) (wages in lieu of accrued leave on exit; second working day; two months on superannuation or death), s.55(3) (principal employer's liability for wages the contractor fails to pay). Opened and read.
- The Industrial Relations Code, 2020 (Act 35 of 2020), Gazette text hosted by the Ministry of Labour and Employment — s.2(zh) (retrenchment and its exclusions), s.70 (one month's notice or wages in lieu; fifteen days' average pay per completed year or part over six months), s.83 (worker re-skilling fund; fifteen days' wages credited within forty-five days). Opened and read.
- The Code on Social Security, 2020 (Act 36 of 2020), Gazette text hosted by the Ministry of Labour and Employment — s.53(1) (five years' continuous service and the exceptions for death, disablement and expiry of fixed term), s.53(2) (fifteen days' wages per completed year; pro rata for fixed-term and deceased employees), Explanation 3 (monthly wage divided by twenty-six, times fifteen), s.56 (determination, notice, payment within thirty days, interest). Opened and read.
- Occupational Safety, Health and Working Conditions (Central) Rules, 2026, G.S.R. 345(E) dated 8 May 2026 — r.69(3) (daily wage as one twenty-sixth of the monthly wage for leave), r.76 (register of leave with wages, Form XX). Opened and read from a mirrored copy of the Gazette [VERIFY: against the e-Gazette original].