Full and Final Settlement Definition:

Full and Final Settlement (F&F Settlement) is the process through which an employer computes and pays the dues of an employee who is leaving the organization. It involves the calculation and settlement of pending salaries, benefits, reimbursements, and deductions to ensure a comprehensive and accurate closure of financial matters.

How Does It Work:

When an employee decides to part ways with an organization, the HR and finance departments collaborate to initiate the Full and Final Settlement process. The process includes the calculation of any remaining salary, accrued leaves, bonuses, and the deduction of any outstanding loans or advances. The objective is to settle all financial transactions between the employer and the departing employee.

Key Features of Full and Final Settlement :

• Salary Calculation: F&F Settlement includes the calculation of pending salaries, including the notice period pay, if applicable, up to the last working day.
• Leave Encashment: Accrued but unused leaves are often compensated during the Full and Final Settlement, providing employees with a payout for their accumulated leave balance.
• Deductions and Reimbursements: Any pending deductions, such as outstanding loans or advances, are adjusted during the settlement. Additionally, reimbursements owed to the employee are processed.

Best Practices of Full and Final Settlement :

• Transparent Communication: Clearly communicate the Full and Final Settlement process to departing employees, ensuring transparency and addressing any queries they may have.
• Timely Completion: Strive to complete the Full and Final Settlement promptly to facilitate a smooth transition for both the employee and the organization.