Full and Final Settlement Confusion: Can Cost-Cutting Affect My Notice Period Pay?

Hi all,

I have some doubts regarding the Full and Final settlement. Kindly clarify:

1. If the company implements a cost-cutting measure of say 10% per month continuously, and an employee leaves the organization, can we apply this cost-cutting measure in the Full and Final settlement?

2. Is the notice period deduction calculated based on gross salary or basic salary?

Thank you.

Dear Garima,

Cost-cutting is applicable to all, so even if an employee leaves, they are still eligible for cost-cutting. Additionally, FNF (Final Settlement) is calculated based on the basic salary.

Thank you.

Dear Karima,

F&F Full and Final Settlement means when an employee resigns from the organization, the calculation is based on the date of leaving as per company rules. This calculation may take around 30 days. If you require a specific format, I can forward it to you shortly.

Thank you.

Dear Karima,

Cost cutting applies to him, and notice period deduction is based on basic only.

Regards,

Hi,

Could anybody please tell me when an employee gives his/her resignation and what happens if their respective manager has:
1) Accepted the resignation.
2) Not accepted the resignation.

Please clarify that if the resignation has not been accepted, what steps need to be taken by the employer?

Dear seshathri,

Could you please forward the format of the full & final settlement? I would like to check it against the format we use in our company and make any necessary changes.

Thank you.

Dear Amit,

If resignation is accepted, exit formalities will be completed as per the set processes, and the employee will be relieved properly.

If not accepted, you may not relieve the employee, although no one waits for your acceptance of resignation. If a person has made up his mind to quit, there is no point in keeping him inside the organization, as he may have a negative impact.

Usually, people put their decision on paper after deciding what steps they will take if the organization does not accept the resignation. There are many organizations that hire people without proper relief from their previous employer only if the person is deemed worthy.

Regards,

Dear Friends,

Full and Final settlement contains leave encashment and salary. If the person serves his notice period, he will receive full salary as usual. If he has any leave balance (not encashed previously), these leaves will be encashed in full and final settlement, with leave encashment calculated based on the basic salary.

If the person is unable to serve his notice period, for instance, if he provides only a 15-day notice instead of the required 30 days according to company policy, he will receive only 15 days' salary. The remaining 15 days will be considered Loss of Pay. However, if he gives a 30-day notice, he will receive full salary, and leave encashment will be calculated as per norm.

Note: The salary for the notice period will be calculated based on the Gross salary.

Thanks and Regards,

Ramesh Varuganti
Sr. HR Executive

Dear Priyanka,

Good afternoon! Kindly specify what kind of help you need in the full and final settlement.

Seniors,

If an employee resigns and gives one month's notice as per the appointment letter, can he avail of the 15 days of leave balance in his account during the notice period, even if management does not sanction those leaves? If he proceeds on leave without official approval, should those 15 days be counted as part of the notice period or not? Please clarify.

Notice pay, whether gross or basic, is purely governed by the clause in the letter of appointment.

With regards to calculation, the last drawn salary will be the basis, provided that you have been consistently issuing letters of pay cuts (with the revised salary) and the same is accepted and acknowledged by the employee.

The same logic applies to an increase in salary in view of annual increments.

Dear Prasad,

Availing of leaves during the notice period or the adjustment of the said leave against the notice period is purely determined by the letter of appointment and the company policy.

In general, many companies do not encourage availing of leaves during the notice period as the basic purpose of asking someone to serve the notice period is that the organization gets sufficient time to identify a replacement and further ensure a smooth handover of the operations. However, management may, at its discretion, extend, reduce, or dispense with the notice period if required, provided such discretion is mentioned in the letter of appointment.

If leave was not sanctioned and there has been no communication to this effect, it can be treated as absenteeism, and the said employee can be terminated by initiating disciplinary action.

Dear Kapil,

I have a doubt here. Suppose, on the time of joining, someone's basic is 4000 and when he is leaving, his basic is 7500. Then on which basic will the FNF be cleared?

Regards,
Sanjeev

Dear Sanjeev,

All the calculations, payments, benefits, as well as recoveries, will always be based on the 'current' or 'last drawn salary'. Will you accept the salary you were drawing 10 years back now? Common sense, isn't it!

Thanks & Regards

Can the same salary be calculated and paid to an unconfirmed staff member; a staff member who is still under probation and has been with the organization for less than 6 months?

Dear Garima,

Cost cutting will be applicable in the case of employees who have left, so accordingly, you need to process his/her FFS. Deductions in FFS are done as per the company policy, but most organizations deduct from the basic salary, not from the gross.

Thank you.

Cost-cutting is applicable to all. Notice pay deduction on basic or gross depends upon the terms of employment and the company's policy. In any case, the basis of notice pay deduction or payment should be the same.

Regards,
Ashok Taneja

Dear Garima,

Cost-cutting is applicable to all and should not be refunded in case of an employee leaving. It would be unjust to the other ongoing employees.

As for the deduction components for the notice period, it depends on the company's policy and terms of employment.

Best Regards,
Ashok

I need the format of the notice period I had paid at my last company for 15 days in cash with the adjustment of 10 days' salary against me.

Dear Amit,

If a resignation is accepted, it should come to HR within 4 working days as per the Standard TATs, but it may differ from company to company policy. The second reason for non-acceptance may be that either the employee is not ready to serve the notice period or the management wants to retain him/her.

Regards,
Dinesh Negi

Dear seniors,

I have a question. I have resigned from my last company and served my notice period until 29th July. As per the company policy, I was required to serve a one-month notice period, but due to some personal reasons, I resigned on 20th August. Therefore, I believe I should be receiving payment for 20 days, or 20 - 9 = 11 days of salary. Please assist me in understanding this scenario further as my boss has mentioned that I should only receive payment for 11 days, which I am unable to comprehend.

Regards,

Gaya

Understanding Salary Calculation After Resignation

I have a question. I have resigned from my last company. I served my notice period until 29th July. According to the company policy, I should serve a month's notice period, so my last working day as per the policy should be 29th August. However, due to some reasons, I resigned on 20th August. Now, I shall be receiving my salary for the 20 days worked, or 20 - 9 = 11 days. Please help me understand this scenario because according to my boss, I should only receive a salary for 11 days, which I don't understand why.

Regards,
Gaya