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Imagine this scenario: It is Friday afternoon. An employee resigns. Under the old regime, your HR team would acknowledge the resignation, and the Finance team would schedule the Full & Final (FnF) settlement for the next payroll cycle—usually 30 to 45 days later.

Under the new Code on Wages (Section 17(2)), that comfort zone is gone.

The law now mandates that wages for employees who have been removed, dismissed, retrenched, or have resigned must be paid within two working days.

For many organizations, this is not just a compliance update; it is a logistical shock. How do you recover assets, calculate dues, and process payments in 48 hours?

Here is how smart organizations are restructuring their exit processes to survive the “Speed Settlement” era.

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1. The Death of the “Standard Cycle” FnF

Traditionally, FnF settlements were batched. Whether an employee left on the 5th or the 25th, their settlement happened at the end of the month (or the next month).

This batching allowed Finance teams to manage cash flow predictably. The new rule destroys this predictability. Settlements are now event-based, not cycle-based.

The Risk: If you stick to your old monthly batching process, you are technically non-compliant every single time an employee leaves mid-month. This opens you up to penalties and interest on delayed payments.

2. The Bottleneck: “No Dues” Clearance

The biggest hurdle to a 2-day settlement isn’t the bank transfer; it’s the internal clearance.

• IT: Has the laptop been returned? Is it damaged?
• Admin: Is the ID card back?
• Finance: Are there outstanding travel advances?

If these departments take 3 days to respond to an email, you have already broken the law.

The Solution: “Pre-Clearance” During Notice Period You can no longer wait for the last day to start clearance.

• Day 1 of Notice Period: Trigger the clearance workflow.
• Asset Recovery: Schedule laptop handover 2-3 days before the last working day.
• Draft Calculation: Have the FnF calculation ready and approved before the employee walks out the door. The only variable left for the final 48 hours should be the “last day attendance.”

3. Managing the Cash Flow Impact

For startups and SMEs, unexpected exits can strain liquidity. If three senior managers resign in the same week, you need to pay out their accumulated Leave Encashment, Gratuity, and unpaid salary immediately—you cannot wait for client payments to hit your account at month-end.

The Strategy:

• Separate Provisioning: Maintain a rolling “Exit Fund” separate from operational cash flow.
• Gratuity Management: Ensure your Gratuity Trust is active and responsive so you aren’t paying out of pocket while waiting for the insurer to reimburse you.

4. The “Data Hold” Dilemma

A common query we get: “What if the employee hasn’t returned the laptop? Do we still have to pay in 2 days?”

This is a grey area, but the law prioritizes the payment of “wages.”

• Best Practice: Do not hold back the entire FnF. Pay the statutory dues (wages earned) within 2 days.
• Deductions: Ensure your employment contract explicitly allows for deductions regarding unreturned assets. However, holding back statutory dues like PF or Gratuity as leverage is now a high-risk strategy that could trigger a labour inspection.

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How Payline Solves the “48-Hour” Panic

At Payline, we realized early on that manual coordination cannot meet this deadline. We shifted our clients to an Automated Exit Workflow.

1. Instant Triggers: As soon as a resignation is approved in the system, tasks are auto-assigned to IT and Admin.
2. Parallel Processing: While the employee serves notice, our payroll team prepares the computation.
3. Express Disbursement: We offer a specialized “Off-Cycle Payment Run” service that processes these ad-hoc payments without disrupting your main payroll.

Don’t let an exit become an emergency. Let Payline handle the chaos of compliance so you can focus on retention.