Kannanmv
Hr & Administration
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Community Manager
Raj Kumar Hansdah
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+2 Others

Dear All Can anyone help me with the advantages and disadvantages of Cheque payment to an employee as their Full and final settlement.
4th December 2010 From India, Allahabad
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,
(Cite Contribution)
4th December 2010 From India, Mumbai
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
6th December 2010 From India, Madras
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 :
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.

7th December 2010 From India, Delhi
Hello
In this regard, the mode of settling the Full and Final settlement amount thru a cheque also has another advantage. When a cheque is issued to a resigned employee towards the Full and Final settlement and he deposits the cheque into his bank account, he can not later dispute the amount of Full and Final settlement. The reason being he himself accepted the cheque from the employer and deposited himself the same 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 I had disputed the amount of Full and Final settlement and yet the company transferred the same to my Bank Account.
MK
2nd March 2016 From India, Mumbai
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