Full and final settlement, or FnF, closes all dues when employment ends. It nets pending salary, leave encashment, statutory bonus and gratuity against recoveries such as a notice shortfall or advances, and is usually paid within 30 to 45 days of the last working day.
Confirm the last working day after notice, since salary, leave and gratuity are all calculated up to that date.
Total pending salary to the last day, encashment of unused earned leave, any statutory bonus due, and gratuity if five years of service are complete.
Deduct any notice-period shortfall, salary advances, loan balances and the value of unreturned company assets.
Tax the components correctly: gratuity is tax-free up to Rs 20,00,000, leave encashment has its own exemption rules, and the balance of salary is taxed normally.
Give the employee a clear settlement statement showing every credit and debit, and pay the net, commonly within 30 to 45 days.
Most employers settle within 30 to 45 days of the last working day, subject to policy and pending recoveries.
Yes, if the employee has completed five continuous years of service, gratuity is part of the settlement.
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