Hello, in this post we will discuss the Full and Final Settlement in payroll.
What is the Full form of FnF or FFs?
FnF or FFS – Full and Final Settlement
What is Full and Final Settlement in Payroll?
Full and Final Settlement commonly known as FnF process is done when an employee is leaving the organization. At this time, he/she has to get paid for the last working month + any additional earnings or deductions. The procedure has to be carried out by the employer after the employee resigns from their services.
The procedure of paying and recovering during the resignation process is called the Final Settlement of the employee.
You can relieve the employee first and then do the FnF or do the final settlement first then relieve the employee. It depends on your company policy.
The major components of FnF are:
- Unpaid Salary
Unpaid salary includes annual benefits such as LTA (leave travel allowance) and arrears or any salary held due to certain reasons.
- Leave Encashment
Unpaid leave dues should be paid by or before the 7th and 10th of the following month of resignation.
Payment for non-availed leaves (earned or privilege leave) has to be calculated based on company policy. So, the different options for leave encashment are:
- Per day Basic (Or Basic + DA OR other components)
- Fixed amount defined by the company
Calculation of per day basic:
(number of days of non-availed leaves * basic salary) / 26 days ( Avg paid days in a month).
For e.g., If an employee has 25 earned leaves which is not availed and basic salary = 5000, then encashed amount will be
(25*5000)/26 = Rs. 4807
- Gratuity
As per Section 7 (3) of the Payment of Gratuity Act 1972, Gratuity should be offered within 30 days of the resignation. If you fail to do so you need to pay with interest.
- Deductions
Deductions include PF, ESI, PT (if applicable), Income Tax, and Compensation for Notice Period not served. Gratuity and encashed earned leave are exempt from tax deducted at source (TDS) as per Income Tax Act. All other payments attract TDS under Section 192 of the Income Tax Act.
When does the settlement happen?
Clearance usually takes time, but it is a policy to clear FnF within 30-45 days after the employee’s last working day.
For gratuity, the stipulation is 30 days after leaving the company, while the bonus must be paid within the specified accounting year.
Points for Employees
- Make sure to settle any advances taken or ensure it gets adjusted in the final settlement.
- Make sure to provide all required documents for the process of FnF
Related:
You can also see how it works in Saral Paypack click on the link below:
This ends the post. Let us know your opinion by commenting below.
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81 Comments
Hi Sir,
I was terminated on 11.10.2023 and in my company, our attendance for salary was marked from 20th to 20th of every month. So, my company told me that I will be paid a salary for 16 days as per my attendance for last month. I didn’t have any leave balance.
My in hand salary was 32k and I had no dues or outstanding, what FNF should I expect?
Please please reply.
Thanks and Regards
Please contact your HR for the details as the calculation will include many company specific components.
if i work for 25 days with the pakage of 7 lakhs per anum . what will i get in full and final??
NO as the policy is defined by the company
COMPANY IS SAYING IF UR ARE RESIGNING COMPANY WILL NOT GIVE UNTILL THEY RELEASE ME FNF ANY SUGGESTIONS
Please check with your HR w.r.t the financials as F&F consists of many salary heads for calculation
Leave encashment will be provided only on basic + DA, but the organization may differ to give it on full day salary
Iam working in private company i have complate 22 years in this my basic salary 30000 per month how much fnf amount i got
when calculating final settlement, leave balance which is remaining…lets say 15 days. is this 15 days calculated on full salary or only basic pay ? as per new uae labor law 2022.
Yes, all encashable leaves can only be taken up for FnF
IF THE LEAVES ARE NOT ENCASHABLE, THEN WE ARE NOT ELIGIBLE FOR EARNED LEAVES FOR FNF
Please contact your HR
I have not received my fnf it has been more than50 days
Please follow up with the HR
Please follow up with the HR
Please i want check my final settlement ,will you help me
Our company packup last month,they give a mail for clearance,I have also hand over all the assets,they said that they will pay this month before 15th,but today is 17 th still my fnf is not clear,what should I do now.no one is responding calls or mails.
If the leaves are encashable, then those have to be paid during FnF
You will get the amount with the said date
Please clear whether employer do not pay any amount against leave pending in the account of employee. Is there any law create by government.
Hello.this is to inform that fnf processing take 30 days from your marked last working days with Teleperformance.requesting you wait till the mentioned date.post fnf settlement your experience cum relieving letter release will be accordingly.
Tell me what it means should I get the my salary or not..
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