Full & Final Settlement is the process of figuring out the various payable dues to an employee who is leaving an organization, retiring, or getting fired.
An employee must be paid under this Full and Final Settlement policy for the last working month, as well as for any taxes and bonus earnings & deductions after the exit clearance done by various internal departments i.e Respective Department, Finance, IT and Human Resources Department etc.,
In this Article, we will see the Full & Final Settlement calculator Template in detail.
When is Full & Final Settlement released?
Full & Final Settlement is released between 30 to 45 days after the last working day of an employee. It may be varied company to company based on the Separation Policy. Employees will be given a lump sum payment in Full & Final Settlement.
What is Separation?
The voluntary conclusion / cessation of employment with the Company initiated by the employee. Separation may happen due to Resignation, Termination, Retirement etc.,
What is the Exit Clearance Form?
Every departing employee, including those taking extended leaves of absence without pay, must complete an Exit Clearance Form to ensure the return of all the Company owned belongings like keys, documents, Assets like Laptop, Mobile and equipment.
Based on the recommendation by the employee’s own department manager, IT and HR, Administration, Finance & Accounts. Access to all systems is blocked. Full & Final Settlement will not be processed by the HR Department until receipt of this form.
How the Full & Final Settlement Template must be
A Full & Final Settlement Template should be simple to read and comprehend. To make the paper easy to read and browse, use headings that are obvious and bullet points. To properly convey the specifics of the settlement, using a table can be useful.
Ascertain that the template has all pertinent information on the employee’s complete and final settlement. Salary, unpaid time off, bonuses, overtime pay, and any overdue bills may be included in this.
It’s crucial to determine the exact sums owing to the employee in their final settlement. To prevent any errors that could lead to underpayment or overpayment, double-check all calculations.
Make sure the template complies with all applicable laws and rules concerning employee settlements. Regarding taxes, social security contributions, and other legal duties, this can be the case.
Make it clear what the employee needs to do in order to collect their last settlement payout. This can entail giving financial information or completing particular paperwork. Confusion and delays can be avoided by having clear communication regarding the payment procedure.
What are all the Payable (Earnings) in the Full & Final Settlement?
The earnings parts are Leave Encashment, Gratuity (for employees who have worked more than 5 years), Employee Bonus. All these payable items are calculated based on Pro rata basis.
What are all the Deductions in the Full & Final Settlement?
The deductions are Salary Advance (if any), Other recovery dues (stores, canteen), Other Departmental dues (if any).
Finally, it should be noted that the Full & Final Settlement process is a vital stage for both employers and employees. It guarantees a smooth separation and offers a final chance to resolve any unresolved financial issues between the employer & Separated employee.
To prevent future disagreements or legal problems, companies must make sure they follow all applicable laws and submit accurate figures and documentation. The settlement statement, on the other hand, must be thoroughly read by employees before they sign it.
If necessary, they should also request clarification. The Full & Final Settlement procedure can be successfully completed and both parties can proceed with their individual goals with effective communication and cooperation.
Hope this Template is useful for your company’s Full & Final Settlement Calculation.
Also read Employee Exit Process with 13 fair Steps