One of the important exit processes for the HR Department is Full and Final Settlement. But most HR persons are confused about this topic. Some HR might ask the following questions during different scenarios during the employee’s exit.
What is Full and Final Settlement?
When is it to be released?
Who is eligible for F&F?
Can I release Full and Final Settlement to Absconded employees?
How to calculate earnings and deductions for F&F?
Can Companies release Final Settlement to Terminated Employees?
Should we include Gratuity in F&F ?
What is the process to be followed for releasing the F&F?
In this Article, we are about to discuss the Full and Final Settlement concept and calculations with Template. First we will check the FAQs and answers.
What is Full and Final Settlement?
Full and Final Settlement consists of a statement which will calculate the earning & deductions of outgoing/exited employees.
When is Full and Final Settlement to be released?
F&F Settlement can happen within 14 to 45 days based on the company policy after the employee exits from the organization. Mostly, HR department takes these times to check the employee’s pending documents, assets, cases, handover items, working days, how the employee exited (resignation / termination / abscond / death) and other earning / deductions calculations.
Who is eligible for Full and Final Settlement?
All exited employees are eligible for Full & Final Settlement. Once the exit formalities are completed, HR will process the final settlement for the exiting employee.
Can I release Full and Final Settlement to Absconded employees?
HR must send the abscond letter to the absconded employees. If there is a proper acceptable justification given by the employee and the management accepts, F&F can be released to the absconded employee. Else, HR must prepare F&F and hold till the proper reply from absconded employees.
How to calculate earnings and deductions for Full and Final Settlement?
For your understanding, the F and F calculator template is attached below. Input fields (all yellow colored box_Employee number, Name, Address, Date of Joining, Date of Leaving, Reason for leaving, Last working day, Last drawn salary, pending salary days, leave encashment, gratuity (if employee completed the 5 years of service), Bonus, salary advance balance, other recovery, other department clearance) have to be filled up by HR.
Once the statement is ready, HR must get approval from Management for payment settlement.
Can Companies release the Final Settlement to Terminated Employees?
The answer is Yes. Companies must release the Full and Final Settlement to all terminated employees.
Should we include Gratuity in Full and Final Settlement?
Gratuity must be calculated in F&F only for the employees who have completed five and above years of service in the organization.
What is the process to be followed for releasing the Full and Final Settlement?
Every company has their own exit process. But here we will take a look at the most common exit process that can be applied for any companies with minor changes.
Step 1:- The resigning employee must submit his / her resignation in writing or email.
Step 2:- The supervisor of the resigning employee should accept the resignation in writing or over the email.
Step 3:- The immediate supervisor will communicate the last working day of the employee to the Human Resources Department.
Step 4:- A handover will be planned by the immediate supervisor and HR informed about it.
Step 5:- Exit interview conducted by Human Resources Department to Exiting employee
Step 6:- Handover document from the immediate supervisor and department head.
Step 7:- Provident withdrawal forms to be filled if applicable submit to the HR Department.
Step 8:- Returning of company properties like laptop, datacard, mobile, handset, sim, Access/ ID cards etc to the respective department persons
Step 9:- Deletion of official email, ERP IDs etc by the IT Department and removing all the accesses.
Step 10:- Exit Form must be completed by the employee for clearing No dues by the following departments.
- Respective Department of the employee
- Finance and Accounts
- IT Administration
- and Human Resources
Step 11:- The exit checklist contains the points mentioned from Step 5 to 10.
Step 12:- Human Resource Department will issue the relieving letter and the experience letter on the last working day.
Step 13:- Once the exit formalities are completed, the HR department will process the final settlement for the relieving employee.
Interesting Steps right!
If an employee is terminated, some of the aforementioned processes/steps will not be followed. This is completely based on the guidelines of the organization and the policies.
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