Laid Off in India? Your Rights, Dues and Next Steps

Last updated: 11 October 2026 · By the Asuraa Team

Quick answer: If you are laid off in India, you are owed unpaid wages within two working days under Section 17(2) of the Code on Wages, plus notice pay, gratuity if eligible, and retrenchment compensation if you count as a worker. Under the Industrial Relations Code in force since 21 November 2025, eligible workers get 15 days' wages per completed year. This is general information, not legal advice.

Key takeaways

• India's four labour codes were notified on 21 November 2025 and replace 29 central labour laws, including the Industrial Disputes Act, 1947.
• Under the Industrial Relations Code, a worker with at least one year of continuous service gets one month's notice or pay in lieu and 15 days' wages per completed year on retrenchment.
• Section 17(2) of the Code on Wages requires wages to be paid within two working days of removal, retrenchment or resignation, without a wage ceiling.
• EPFO's October 2025 reforms allow 75% of the PF balance to be withdrawn immediately on unemployment, with the remaining 25% after one year.
• The Industrial Relations Code excludes supervisory staff earning above Rs 18,000 a month from the definition of worker, which affects many IT employees.

Being laid off is a shock, and the first week matters more than people expect. Decisions you make in those days, about what you sign, what you collect and how you handle your provident fund, affect your money and your next job. This guide explains the rules that apply in India after the new labour codes, the dues you should check, and a step-by-step plan for moving on.

This is general information, not legal advice. For a dispute about your specific case, speak to a labour lawyer or your state labour department.

What are your rights if you are laid off in India?

Your rights depend on whether you count as a "worker" under labour law, what your employment contract says, and how long you have served. India's four labour codes were notified on 21 November 2025 and replace 29 central labour laws, including the Industrial Disputes Act, 1947 and the Payment of Gratuity Act, 1972, according to a Khaitan & Co update. The same update notes that only parts of each code were in force at first, and that existing rules continue until new ones are issued, so some details still vary by state.

Under the Industrial Relations Code, 2020, a worker with at least one year of continuous service who is retrenched must get one month's notice or wages in lieu, plus 15 days' wages for every completed year of service, as summarised by LKS. The code also requires the employer to contribute 15 days' last-drawn wages to a worker re-skilling fund, which is credited to the worker within 45 days of retrenchment.

Does the IR Code protect IT and corporate employees?

Often only partly. The Industrial Relations Code text excludes people employed in a supervisory capacity drawing wages above Rs 18,000 a month from the definition of "worker", and LiveLaw notes that most managers are also outside it. Many software engineers, analysts and consultants may therefore fall outside the retrenchment compensation rules, depending on what they actually do day to day.

If you are outside the "worker" definition, your contract, your company's policies and your state's shops and establishments law become the main sources of your rights. Your notice clause, severance policy and leave encashment rules matter most. Our guide to notice period rules in India explains how notice clauses usually work.

One important protection applies more widely. Section 17(2) of the Code on Wages, 2019 requires wages to be paid within two working days when an employee is removed, dismissed, retrenched or resigns, and, as LiveLaw explained in October 2026, the code removed the earlier wage ceiling so it also covers managers and higher earners.

What dues should you get in your full and final settlement?

You should expect your unpaid salary, notice pay where applicable, encashment of eligible leave as per policy, any bonus already due, and gratuity if you qualify. The table below shows the main items and the rule or timeline that applies.

LiveLaw notes that gratuity and retrenchment compensation are excluded from the definition of wages, so they are not covered by the two-day rule; gratuity has its own 30-day timeline under the Code on Social Security.

What should you do in the first week after a layoff?

Get everything in writing, collect your documents, and avoid signing anything you have not read. A practical order:

1. Ask for the termination in writing. You want the reason (for example, retrenchment or role elimination), your last working day and the settlement components.
2. Read your appointment letter and policies. Find the notice clause, severance policy, leave encashment rule and any clawback of joining bonus.
3. Do not sign a release on the spot. Ask for time to read any separation agreement, especially clauses waiving claims. You can ask questions in writing.
4. Check the settlement statement line by line. Compare it with your last payslip and the table above.
5. Collect your exit documents. Relieving letter, experience letter, last three payslips, and Form 16 for the year. See relieving letter vs experience letter for what each should say.
6. Download your EPF passbook. Confirm your employer's last contribution has been credited before you decide whether to withdraw or transfer.
7. Note your group insurance end date. Company health cover usually ends with employment, so arrange personal cover if needed.

Should you withdraw your PF after losing your job?

Usually not, unless you genuinely need the money. EPFO's October 2025 reforms let members withdraw 75% of their balance, including the employer share and interest, immediately on unemployment, with the remaining 25% available after one year, according to the Ministry of Labour's press release. The same release says pension (EPS) money can be withdrawn only after 36 months instead of 2, and that 10 years of EPS membership is needed to qualify for a pension.

If you expect to join a new employer within a few months, leaving the balance and transferring it keeps your service continuous and the interest compounding. Our EPF UAN activation guide explains how to check your passbook, and our explainer on PF and gratuity covers the basics.

What do most guides on layoffs in India get wrong?

Most guides quote the old Industrial Disputes Act formula and imply every employee is entitled to it. That is misleading in two ways.

The "worker" test decides a lot. Retrenchment compensation under the IR Code applies to workers. Many IT and corporate employees in supervisory or managerial roles fall outside that definition, so their real protection comes from their contract, policies and wage law. Check your role honestly before you rely on a formula.

Wages and other dues have different clocks. The two-working-day rule covers wages. Gratuity and retrenchment compensation are excluded from that definition and follow separate rules, so a delay in gratuity within its own window is not a breach of the two-day rule, and vice versa.

Where can you complain if your dues are not paid?

Start with a written request to HR, then approach your state labour department if dues remain unpaid. Keep copies of your contract, payslips, termination letter and all emails. LiveLaw notes that authorities under the new codes are being notified state by state, and that contractual disputes such as stock options may still go to civil courts. A labour lawyer can tell you which forum suits your case.

How do you restart your job search after a layoff?

Take a few days to reset, then treat the search as a project with a weekly plan. Update your resume with your last role's outcomes, decide how you will describe the layoff (briefly and factually), and restart applications within the first two weeks while your skills and references are fresh. For framing the gap, see our guide on writing a resume with a career gap. For the joining side of your next role, our first job guide from offer to joining covers offer letters, documents and onboarding.

Related guides

• Your First Job in India: From Offer Letter to Joining Day and Beyond
• Your First Week at a New Job: What to Do and What to Avoid
• Joining Documents Checklist for Freshers in India
• How to Decline a Job Offer Politely (With Templates)

FAQ

How much compensation do you get if you are laid off in India?

If you count as a worker under the Industrial Relations Code and have at least one year of continuous service, you get one month's notice or pay in lieu plus 15 days' wages for every completed year. Many IT and corporate employees in supervisory or managerial roles fall outside that definition, so their severance depends on their contract and company policy. This is general information, not legal advice.

How soon must my employer pay my final salary after a layoff?

Section 17(2) of the Code on Wages, 2019 requires wages to be paid within two working days when an employee is removed, dismissed, retrenched or resigns. LiveLaw's October 2026 analysis notes this now covers higher earners too. Gratuity and retrenchment compensation are not part of wages under this rule and follow separate timelines, with gratuity due within 30 days.

Can I withdraw my full PF after losing my job?

Under EPFO's October 2025 reforms, you can withdraw 75% of your PF balance immediately on unemployment, including employer contributions and interest, and the remaining 25% after one year. Pension money can be withdrawn only after 36 months. If you expect to join a new employer soon, transferring the balance usually serves you better than withdrawing.

Am I eligible for gratuity if I am laid off before five years?

Permanent employees still need five years of continuous service for gratuity, as Business Today reported in November 2025. Fixed-term employees became eligible after one year of continuous service under the new labour codes. Gratuity is calculated as last salary multiplied by 15/26 and years of service, capped at Rs 20 lakh, and should be paid within 30 days.

Should I sign the separation agreement my company gives me?

Read it fully before signing, and ask for time if you are pressured to sign on the spot. Check whether it waives future claims, what severance it offers, and whether the amounts match your contract and payslips. If the stakes are high or something looks wrong, a labour lawyer can review it. This is general information, not legal advice.

Final thoughts

A layoff is a business decision, not a verdict on you. Secure your dues and documents first, keep your PF intact if you can, and then restart steadily: check your updated resume against real job descriptions with the Asuraa AI resume reviewer before you apply.