Struggling with Final Settlement Calculation: Can Anyone Help Clarify This Scenario?

I am in serious need of help as I am not able to calculate the exact F&F amount. Would appreciate it if someone could help me with this. I will put forth the complete scenario.

Employee Details and Compensation

An employee joined on 15 Sep 2010 with a CTC of 3.5 lacs p.a., and from April 2011 onwards, the CTC was hiked to 3.7 lacs p.a. Also, he had 3 compensatory offs pending with him since he worked on holidays.

Leave Policy and Usage

As per the corporate policy, the employee is eligible for 7 sick leaves, 7 casual leaves, and 21 privileged leaves per annum. Only PLs are encashable. The employee submitted the resignation on 23 Nov 2011 and had to serve a notice period of 45 days as per policy, which he did.

The employee was on leave from 3 Nov 2011 to 14 Nov 2011 due to medical grounds. He had already used all his sick leaves, but he had his Casual Leaves and 3 comp offs. (Would there be any deduction in salary for being on leave?)

Final Settlement Query

The employee was relieved from the organization on 6 Jan 2012. Now, what would be the total F&F amount that needs to be paid to the employee? Please help in this regard.

Thanks in advance.

CTC and Leave Calculation

You mention the CTC. It's good, but for the calculation, you have to consider the last drawn salary. For leave, PL is given earned up to the last date of relieving, and CL and SL are calculated on a proportionate basis. For example, if CL is allocated for the current year as 12, and if it is worked up to November, then the individual is eligible for 11 days of CL. If more days are taken, then you may recover from PL. The same applies to SL. If the individual used the COFF, then it's okay, regardless of calculation.

Other Benefits Calculation

Regarding other benefits like LTC and medical, you have to calculate as per your company's policies.

Regards,
Mahesh

Hi Mahesh and other friends, please find the attached document containing the details required for the calculation. Your prompt response is greatly appreciated.

Regards

You should consider only Basic and Special Allowance for calculating the F&F Settlement Calculation. Since he has resigned from the job, he is not entitled to any other settlement except his leave encashment. After a 2-month period, you can provide him with the PF Forms and clear his PF dues.

Dear Sajith,

I went through the details that you have mentioned above. According to it, you have stated that the employee resigned on 23rd November, served the entire notice period, and was on leave on 3rd November and 14th November, which was before he resigned. Additionally, you mentioned that only PL is encashed, so the question of paying him for the comp offs or casual leave does not arise.

He should be paid his salary until his last working day, with necessary statutory deductions being made. The PL available should also be encashed, along with any other dues payable to him or advances that need to be recovered – such as advances for travel purposes where details have not been submitted or loans taken from the company for personal reasons.

Regards,
Sulakshana

Government Regulations on Notice Pay Calculation

What are the government regulations on the calculation of notice pay? Is there any fixed regulation regarding that from the Government of India/Income Tax Department of India, or is it based on the policies made by the company from time to time?

Regards

Hi there! There are no government regulations either from the Government of India or the Income Tax Department regarding notice pay calculation; it all depends on the company policy, which can vary from company to company.

Only after an employee has been relieved, their PF Form needs to be submitted after two months, and the Gratuity can be paid to them immediately, that is within a week's time.

Regards,
Sulakshana

As I feel, you can consider the comp off for those two days, and there is no need for any salary deduction for those two days. Also, there is no need to club it with CL to avoid confusion, as CL is not encashable. Only PL needs to be calculated on a pro-rata basis.

Regards,
VASAVI S

Dear Sajith,
After considering the details you have mentioned, I would recommend giving him the following items during the full and final settlement:

- Salary
- PL Encashment amount
- Gratuity if he has successfully completed 5 years of service

It is very well said by the seniors that the question of deducting his salary for the leaves he had taken prior to his resignation doesn't arise. If he could have taken a leave after the resignation, then you have the right to deduct his salary, but not in the present scenario. You don't have to consider his comp off during the full and final settlement calculation.

Regards,
Shikha

Gratuity doesn't arise as the person has not completed 5 years in the company. Moreover, the person has 3 comp offs and 7 Casual Leaves, so I think the 10 days off which he has taken can be adjusted against this. Since there is no government policy either by the Government of India or the IT department, and there is no clause mentioned by the company policy that only Basic+HRA, the full salary including all the heads needs to be paid during the 45 days notice period.

Calculation of Notice Pay

Also, please advise me on whether I should calculate the notice pay based on the Basic+HRA or the complete heads mentioned in the word document. Please help me in the calculation so that we can rectify and give the proper F&F. Open for more suggestions.

Regards