Hi, plz help me to understand full and final settlement at the time of leaving the company. what are the factors should be kept in mind at the time of doing final settlement. Prativa
From India, New Delhi
2From India, New Delhi
Hi Prativa,
During preparing Full & Final settlement of an employee we have to keep in mind the payable salary and total deduction.
In the payment we have to see the salary status, the leave status and Bonus if payable.. whereas in the deduction part comes the advance taken if any, Notice period recovery if applicable and any other liabilities he has with the organisation.
For example if an employee's gross/month is 10,000 Rs.
He resigns on 1st of July with teh notice period given that 31st of July will be his last working day with teh organisation. If he has 15 earned leaves in his account, then while preparing F & Final statement we have to pay him the complete month salary + earned leaves amount + Bonus if applicable with the HR policy..
Whereas in the deduction side we take of PF amount, ESI deduction and the Notice period if applicable..
Hope now it will be fine with you.
Regards,
Amit Seth.
From India, Ahmadabad
During preparing Full & Final settlement of an employee we have to keep in mind the payable salary and total deduction.
In the payment we have to see the salary status, the leave status and Bonus if payable.. whereas in the deduction part comes the advance taken if any, Notice period recovery if applicable and any other liabilities he has with the organisation.
For example if an employee's gross/month is 10,000 Rs.
He resigns on 1st of July with teh notice period given that 31st of July will be his last working day with teh organisation. If he has 15 earned leaves in his account, then while preparing F & Final statement we have to pay him the complete month salary + earned leaves amount + Bonus if applicable with the HR policy..
Whereas in the deduction side we take of PF amount, ESI deduction and the Notice period if applicable..
Hope now it will be fine with you.
Regards,
Amit Seth.
From India, Ahmadabad
Hi Prativa.. If your company is paying incentives then definitely you should count Incentives too in the payable amount.. Regards, Amit Seth.
From India, Ahmadabad
From India, Ahmadabad
Hello Prativa,
While doing full and final settlement followings steps should be taken.
1. Check his/ her appoint letter for notice period clause( Level wise may differ ).
2.Then when to relieve him.
3. Whether to releve by adjusting leave ( PL) balance towards his notice period or not ( in some companies they encash the leave balance and recover full notice period, which is actually not good practice )
4. Then check his leave balance - whether he taken extra leaves or not, if yes then recover through f&F. Calculate his PL leaves for the period he worked during the current year.
5. Then check what will be his salary for the current month - if there is no enough leave balance for recovering NP then you can adjust his net salary towards NP.
6. Always calculate amount of Notice period on Gross payment for the month ( Basic+other allowances which are paid in salary. )
7.Then check whether there is any pending amounts like LTA/ Medical and also check whether by any default you paid him extra. Because some companies pays LTA/ Medical in advance, so in such case you have to deduct the amount or to pay as the case may be.
8.Then check total no years of his service for calculating Gratuity. You have to pay him only if he completed 5 years service in your company .( for this clause pls. check Gratuity Act). for this formula is (Last Basic+ DA / 26 days * 15 days )* no of yrs. completed.
9. You have to calculate his Bonus amount. For payment of Bonus there are two options- you can pay him bonus in his full and final or you can pay him bonus while Diwali time or there is one clause in Bonus act by which you can pay bonus to the ex- employees within Eight months from the date on which you paid to your current employees after taking such application from them.
This is really important procedure kindly do f&f by taking all care.
Hope this will help you. If you want any further clarification or any format them kindly mail me on below address.
or 
With best Regards
Kedar
From India, Pune
While doing full and final settlement followings steps should be taken.
1. Check his/ her appoint letter for notice period clause( Level wise may differ ).
2.Then when to relieve him.
3. Whether to releve by adjusting leave ( PL) balance towards his notice period or not ( in some companies they encash the leave balance and recover full notice period, which is actually not good practice )
4. Then check his leave balance - whether he taken extra leaves or not, if yes then recover through f&F. Calculate his PL leaves for the period he worked during the current year.
5. Then check what will be his salary for the current month - if there is no enough leave balance for recovering NP then you can adjust his net salary towards NP.
6. Always calculate amount of Notice period on Gross payment for the month ( Basic+other allowances which are paid in salary. )
7.Then check whether there is any pending amounts like LTA/ Medical and also check whether by any default you paid him extra. Because some companies pays LTA/ Medical in advance, so in such case you have to deduct the amount or to pay as the case may be.
8.Then check total no years of his service for calculating Gratuity. You have to pay him only if he completed 5 years service in your company .( for this clause pls. check Gratuity Act). for this formula is (Last Basic+ DA / 26 days * 15 days )* no of yrs. completed.
9. You have to calculate his Bonus amount. For payment of Bonus there are two options- you can pay him bonus in his full and final or you can pay him bonus while Diwali time or there is one clause in Bonus act by which you can pay bonus to the ex- employees within Eight months from the date on which you paid to your current employees after taking such application from them.
This is really important procedure kindly do f&f by taking all care.
Hope this will help you. If you want any further clarification or any format them kindly mail me on below address.
With best Regards
Kedar
From India, Pune
Hi Kedar, the points gvn by u are very informative. I’ll takecare all these things at the time of doing f & f stlmnt. Prativa
From India, New Delhi
From India, New Delhi
Dear Sir,
pls advice i am job proprietor ship company from august 2005-august 2009
September 2009 to new company create same postilion same company name
proprietor ship to partnership
as today our boss not ready for el payment & gratuity payment.
kindly advice ,
saleem ahmed
contact number 9999775165
From India, Delhi
pls advice i am job proprietor ship company from august 2005-august 2009
September 2009 to new company create same postilion same company name
proprietor ship to partnership
as today our boss not ready for el payment & gratuity payment.
kindly advice ,
saleem ahmed
contact number 9999775165
From India, Delhi
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Full n final settlement.doc