Dear All Can anyone help me with the advantages and disadvantages of Cheque payment to an employee as their Full and final settlement.
From India, Allahabad
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From India, Allahabad
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Greetings,
As raised by Raj , please share how do you process the F&F in your organization. You need to keep a valid legal proof of the amount paid to the employee. A demand draft is impossible. Bank transfer is not considered. A cheque issued will have the number and a copy signed with a declaration makes it legal proof of the employee receiving it. This is stored in the employee file. Hence avoids future conflicts.
Regards,
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From India, Mumbai
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1893As raised by Raj , please share how do you process the F&F in your organization. You need to keep a valid legal proof of the amount paid to the employee. A demand draft is impossible. Bank transfer is not considered. A cheque issued will have the number and a copy signed with a declaration makes it legal proof of the employee receiving it. This is stored in the employee file. Hence avoids future conflicts.
Regards,
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From India, Mumbai
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Dear Best HR,
Salary transfers are possible for Full and Final settlement. But it will be impossible for you to create a record to attach it alongwith the full and final settlement work sheet. This is the reason why cheques are issued. Because in the full and final work sheet the cheque number and date is mentioned alongwith the amount and bank details.
This facilates us to present the matter before internal and external auditors.
Full and final settlements are generally not small sums of money to be paid in the form of cash.
Even in cases wherein you are unable to settle the amount on the date of the employees exit, it is suggested to obtain the address for communication and forward the full and final work sheet and an advanced stamped receipt for the dues to the employees address clearly indicating that the cheque mentioned in the full and final worksheet will be forwarded upon receipt of the advanced stamped receipt.
As promised upon receiving the advanced stamped receipt forward the cheque by registered post with acknowledgement due and file this in the employees personal file.
This procedure will also be relevant to bonus payable to the employee after his exit. Generally, bonus is declared a few months after the employee leaves.
Trust the matter is clarified
M.V.KANNAN
From India, Madras
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Salary transfers are possible for Full and Final settlement. But it will be impossible for you to create a record to attach it alongwith the full and final settlement work sheet. This is the reason why cheques are issued. Because in the full and final work sheet the cheque number and date is mentioned alongwith the amount and bank details.
This facilates us to present the matter before internal and external auditors.
Full and final settlements are generally not small sums of money to be paid in the form of cash.
Even in cases wherein you are unable to settle the amount on the date of the employees exit, it is suggested to obtain the address for communication and forward the full and final work sheet and an advanced stamped receipt for the dues to the employees address clearly indicating that the cheque mentioned in the full and final worksheet will be forwarded upon receipt of the advanced stamped receipt.
As promised upon receiving the advanced stamped receipt forward the cheque by registered post with acknowledgement due and file this in the employees personal file.
This procedure will also be relevant to bonus payable to the employee after his exit. Generally, bonus is declared a few months after the employee leaves.
Trust the matter is clarified
M.V.KANNAN
From India, Madras
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(Fact Check Failed/Partial)-The user's reply contains inaccuracies. It is essential to note that the method of payment for full and final settlements can vary based on company policy and legal regulations. Cash payments may not always be prohibited, but proper documentation and compliance are crucial.
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Dear kannanmv
Excellent reply !!!
One of the best, logical and correct answers that I have seen recently.
Such answers are the hallmark of an adept and experienced HR professional.
I am quoting the most relevant points of your post.
In addition to the ones given by you; I would also like to add few other points :
From India, Delhi
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Excellent reply !!!
One of the best, logical and correct answers that I have seen recently.
Such answers are the hallmark of an adept and experienced HR professional.
I am quoting the most relevant points of your post.
In addition to the ones given by you; I would also like to add few other points :
It is not always possible or PRUDENT, to pay the full and final payments as normal salary; since, generally the data is PULLED OUT from the Current Employee Salary Sheet/Database.
This is IMPORTANT so as to prevent automatic payment of salary, by mistake, in subsequent months.
Also, name is also STRUCK OFF from the Employees Rolls.
Moreover, such procedures are helpful since there would be no other opportunity (like next month's salary in case of Current Enployees) to adjust any last moment leave/absences undertaken.
From India, Delhi
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(Fact Checked)-The user reply contains accurate information regarding the advantages of using cheque payments for full and final settlements, including the mention of cheque details for auditing purposes and the prevention of automatic salary payments. The additional points provided align with best practices in HR and financial processes. (1 Acknowledge point)
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Hello,
In this regard, the mode of settling the full and final settlement amount through a cheque also has another advantage. When a cheque is issued to a resigned employee for the full and final settlement, and he deposits the cheque into his bank account, he cannot later dispute the amount of the full and final settlement. The reason is that he himself accepted the cheque from the employer and deposited it into his bank account. On the contrary, if the company were to transfer the full and final settlement amount to the bank account of the resigned employee, he can always argue that he had disputed the amount of the full and final settlement, yet the company transferred the same to his bank account.
MK
From India, Mumbai
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In this regard, the mode of settling the full and final settlement amount through a cheque also has another advantage. When a cheque is issued to a resigned employee for the full and final settlement, and he deposits the cheque into his bank account, he cannot later dispute the amount of the full and final settlement. The reason is that he himself accepted the cheque from the employer and deposited it into his bank account. On the contrary, if the company were to transfer the full and final settlement amount to the bank account of the resigned employee, he can always argue that he had disputed the amount of the full and final settlement, yet the company transferred the same to his bank account.
MK
From India, Mumbai
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(Fact Check Failed/Partial)-The user reply is inaccurate. According to labor laws, the mode of payment for Full and Final settlement does not impact the employee's right to dispute the amount owed. The acceptance of a cheque does not waive this right.
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(Fact Checked)-[The user's reply provides accurate information regarding the process of Full and Final settlement through cheque payment, ensuring legal proof. Well done!] (1 Acknowledge point)