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The full and final settlement process is a mandatory process that every HR professional must follow when an employee decides to leave the organization. This process includes the calculation of unpaid salary, leave encashment, gratuity, bonus (if any), and deductions, if any. Here's a step-by-step guide on how to handle the full and final settlement process in a simple and easy-to-understand manner:
1. 🔍 Identify the Leaving Employee: Make sure you have all the necessary details about the employee including their date of joining, date of resignation, and date of relieving.
2. 🕰 Calculate Unpaid Salary: Determine how many days the employee has worked in the last month of their service and calculate the salary for those days.
3. 🗝 Calculate Leave Encashment: Check the number of unused leaves the employee has accumulated and calculate the amount according to the company's leave policy.
4. 🚘 Calculate Gratuity: If the employee has served more than five years, they are eligible for gratuity. Use the formula [(15 x last drawn salary x tenure of working) divided by 26].
5. 🎁 Calculate Bonus: If there's a company policy of providing a bonus, calculate the pro-rated bonus.
6. 🚤 Calculate Deductions: Deductions could include tax deductions, advances, loans, or any other obligations the employee has towards the company.
7. 🈯 Prepare the Settlement Statement: Add all the amounts and prepare the final statement. Make sure to cross-check all the calculations to avoid any errors.
8. 🈶 Communicate to the Employee: Once the full and final settlement statement is ready, share it with the employee. Give them a chance to raise any queries or concerns.
9. 🆚 Make the Payment: After all queries are resolved, proceed with the payment. The payment should be made within 45-60 days of the employee's last working day, as per the Payment of Wages Act, 1936.
Please remember that this process could slightly differ based on company policy and regional labor laws. Always cross-check the calculations and ensure the process is compliant with the law.
📶 Note: It's important to document the process for future reference and to maintain transparency with the employee. This will also help in case of any legal issues in the future.
From India, Gurugram
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1. 🔍 Identify the Leaving Employee: Make sure you have all the necessary details about the employee including their date of joining, date of resignation, and date of relieving.
2. 🕰 Calculate Unpaid Salary: Determine how many days the employee has worked in the last month of their service and calculate the salary for those days.
3. 🗝 Calculate Leave Encashment: Check the number of unused leaves the employee has accumulated and calculate the amount according to the company's leave policy.
4. 🚘 Calculate Gratuity: If the employee has served more than five years, they are eligible for gratuity. Use the formula [(15 x last drawn salary x tenure of working) divided by 26].
5. 🎁 Calculate Bonus: If there's a company policy of providing a bonus, calculate the pro-rated bonus.
6. 🚤 Calculate Deductions: Deductions could include tax deductions, advances, loans, or any other obligations the employee has towards the company.
7. 🈯 Prepare the Settlement Statement: Add all the amounts and prepare the final statement. Make sure to cross-check all the calculations to avoid any errors.
8. 🈶 Communicate to the Employee: Once the full and final settlement statement is ready, share it with the employee. Give them a chance to raise any queries or concerns.
9. 🆚 Make the Payment: After all queries are resolved, proceed with the payment. The payment should be made within 45-60 days of the employee's last working day, as per the Payment of Wages Act, 1936.
Please remember that this process could slightly differ based on company policy and regional labor laws. Always cross-check the calculations and ensure the process is compliant with the law.
📶 Note: It's important to document the process for future reference and to maintain transparency with the employee. This will also help in case of any legal issues in the future.
From India, Gurugram
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Full & final settlement format.xls