Termination and Final Settlement: Can Companies Demand It and When Is It Fair?

Hello friends,

Please provide your valuable views. If an employee is being terminated from a job by a company, can the company ask him for full and final settlement? In what case is this valid and where does it hold invalid? Kindly guide, dear friends.

Thanks and regards

Hi Karthiken,

Were you talking about F&F or Salary in lieu of Notice Period? Full and Final Settlement is a process wherein you settle all financial transactions with the employee who is leaving with regard to his salary, leave encashment, bonus (if applicable), etc. At the end of the process, the company doesn't owe anything to the employee, and the employee doesn't owe anything to the company as well... that's the whole purpose of F&F.

So, even if you terminate the employee, you still need to do his F&F settlement. It's not something you 'ask from' the employee. It's something you need to do as part of the exit process for each and every employee, whether resigned or terminated.

If you are talking about retrieving the notice period amount, then it depends on your company policy. Usually, companies don't ask the employee to pay the notice period if he is being terminated.

Hope this helps.