Salary After Termination in India – Quick Guide

If your job ends, you probably wonder how much money you’ll actually receive. Indian labor law sets clear rules about what an employer must pay when you’re let go. Below you’ll find the main components, how they’re calculated, and what to do if the payment’s delayed.

Notice Pay and Salary Due

First up is notice pay. The law says an employer must give you either a written notice period or pay in lieu of notice. Most contracts mention 30 days, but it can be longer for senior roles. If you get a 30‑day notice, you’ll receive your regular salary for those days, plus any earned overtime or bonuses that are due.

Don’t forget about arrears. If the employer missed any salary payments before termination, those are still owed. Check your payslips and make sure the total matches the amount you’ve earned up to the last working day.

Gratuity, Retrenchment & Other Benefits

Gratuity is a lump‑sum payment you get after 5 years of continuous service. The formula is (last drawn salary × 15/26) × years of service, capped at 20 years. It’s payable when you’re terminated, retire, or resign after the qualifying period.

Retrenchment compensation applies when an employer reduces the workforce for economic reasons. The payment equals 15 days’ wages for each completed year of service, plus any unused earned leave. This is separate from gratuity and is mandatory if the layoff meets legal criteria.

Other benefits can include provident fund (PF) withdrawal, employee state insurance (ESI) settlement, and payment for accrued leave. PF is usually transferred to your account, while ESI is settled based on the last contribution period. Unused leaves must be paid at the rate of your basic salary.

To make sure you get everything, request a final settlement statement from HR. The document should list salary, notice pay, gratuity, retrenchment, PF, and any other dues. Review it carefully and raise any discrepancies within 15 days.

If the employer refuses or delays payment, you have options. File a complaint with the labor commissioner, or approach a labor court. Most cases are resolved through a written notice before heading to court, which saves time and money.

Remember, the payment timeline is usually within 30 days of termination, unless a different period is agreed in the contract. Late payments may attract interest as per the provisions of the Negotiable Instruments Act.

Bottom line: know the components—notice pay, salary arrears, gratuity, retrenchment, PF, and leave settlement. Get a written breakup, verify calculations, and act quickly if anything looks off. With the right steps, you’ll receive the full amount you’re legally entitled to after termination.