Full and Final Settlement Delays: Should ESI, PF, and PT Still Be Deducted?

If in any case, the F&F is processing after a one or two-month delay, is it really necessary to deduct ESI, PF & PT from the F&F amount? If yes, please share the best industry practices process.

PF, ESI, PT, etc. are mandatory deductions for the period during which an employee worked. Whether you pay the money today or settle later, it has to be deducted and deposited to the concerned statutory agencies.

Dear Manoj,

Yes, it is mandatory to deduct PF, ESIC, and PT in F&F as well. Even though you are processing the final settlement after 1 or 2 months, you need to process the due salary in the same month along with your regular employees in the salary register. This way, you will be able to comply with all the statutory deductions. If you find any deductions are still due, you can deduct them from the F&F amount or ask the employee to pay the shortfall. I hope this resolves your query.