HR Terminology

Full & Final Settlement

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  7. Full & Final Settlement: Meaning

Full & Final Settlement refers to the process by which an employer completes the financial transactions and legal obligations associated with an employee’s exit from the organisation. This settlement occurs when an employee resigns, retires, or is terminated, and it involves the calculation and payment of final dues, processing clearances, and the conclusion of the employment relationship.

The Full and Final Settlement process is typically conducted in accordance with company policies, employment contracts, and relevant labour laws. Timely and accurate completion of this process is essential for both the employer and the departing employee to ensure a smooth transition and the fulfilment of legal and financial obligations.

FAQ

Full & Final Settlement typically includes the employee's last salary, pending bonuses, unused leave encashment, and any other outstanding financial obligations. It aims to settle all monetary matters between the employer and the departing employee.

The calculation of Full & Final Settlement involves factors such as the employee's basic salary, allowances, and deductions. It also considers any pending benefits or reimbursements. The HR department or finance team usually handles this calculation.

The timeline for Full & Final Settlement can vary, but it is generally expected to be processed within a specified period after the employee's departure, such as 30 days. Delays may occur based on the complexity of the calculations or company policies.

Employees have the right to raise concerns or disputes regarding their Full & Final Settlement. It is advisable to communicate any discrepancies or issues to the HR department promptly. Companies usually have a process in place to address such disputes.

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