What Does 'Full and Final Settlement' Mean and How Is It Different from CTC and Gross Salary?

Hello everyone, could someone kindly explain what the term \'full and final settlement\' means and how the process is conducted? Could you also clarify the difference between CTC and gross salary? Thank you in advance.
Best Regards,
Nidhi Sahni

Hi Nidhi,

Full & Final settlement, also called as FUFA, is done when an employee resigns or quits from his/her job. A No Due Certificate has to be issued from his/her immediate boss, and later an EXIT interview has to be conducted. Afterward, the employee has to fill out all the formalities. Please note that this process may vary from company to company.

CTC stands for the cost to company, which is a comprehensive package including basic salary, DA, HRA, mobile, conveyance, and any other allowances included in the package. It represents the total cost incurred by a company for hiring each employee.

Gross salary is the amount before deductions, while deductions include provident fund, professional tax, loans, and any other deductions. Net salary, also known as take-home pay, is the amount after deductions.

Note: If I am wrong, please do correct me. :)

With regards,
Murali

Full and Final Settlement stands for when an employee leaves an organization, all the dues, e.g., Medical, LTA, any such allowances which are paid annually, the salary for the number of days the employee has worked before the cessation of services in the last working month, should be settled along with any other claims, if due, e.g., Travel expenses or phone bill, etc. In addition to all this, PF settlement forms no. 19 and 10 C should be submitted to the PF department by the Admin/HR department, in case the employee wants to withdraw the PF amount.

Hope this information may solve your query. In case it does not, you can revert back for more information.

Best Regards,

Deepak Dwivedi
Asst. Manager - HR

Dear Nidhi,

Full and final settlement is initiated on the resignation of an employee. Initially, a work certificate is issued after an employee has completed his notice period. The full and final settlement includes 1 paid day for the month in which an employee has resigned, EL, penalties/fines, etc. The time taken for FnF varies from 45-90 days, depending on the company. Only when the FnF is completed and all the dues are settled, a no dues certificate and a relieving letter are given.

Gross salary, also known as take-home salary, includes Basic, HRA, CCA, conveyance, etc. CTC includes gross salary and the fringe benefits provided to an employee like meal reimbursement, petrol, mobile reimbursement, etc.

Hope this helps.

Thanks,
Deepti

Hi,

Full and Final settlement is the payment made to employees encompassing all their dues from the employer. This includes the LTA, medical benefits, and leave balances.

I hope this helps! Let me know if you have any more questions.

Nidhi,

On F&F - Full & Final Settlement

You can refer Murali's inputs; however, the following steps may help:

Step I - No Dues formalities on the last day from all departments like Supervisor, Finance, Facility, Library, Security & HR.

Step II - Exit interview by HR.

Step III - Documents - service certificate, relieving letter, final settlement & Pay Cheque (Small size companies give on the same day (most of them), and big size companies take 2 to 6 weeks).

Step IV - A copy of the relieving letter can be placed in the personal file.

On CTC & Gross

You may please refer to Murali's inputs.

HR Team, I have provided the information to the best of my knowledge; please correct me wherever possible.

Thanks, Pradeep

Hi Guys,

I am a bit mistaken. From what I know, gross and CTC mean the same. It's the cost the company bears to hire you. It includes the Salary take-home (also called NET salary or in-hand salary) + all deductions like PF, gratuity, transport, meal, + reimbursement (telephone, driver wages, company car, and accommodation which add up to perks and benefits).

I may be wrong, so please help me clear it.

Nidhi: FNF's are done for both resignation and termination cases. After FNF's only we get an employee's payout or recovery. If it's a payout, a no-due certificate is given by finance to the employee, and after taking a copy of it, you give away the relieving letter or experience letter. If it's recovery and if the employee pays the recovery amount to finance, then again the same procedure is followed. Only in job abandonment and misconduct cases, we shouldn't give out the relieving letter.

FnF includes: the amount for the notice period served + any earned leaves (PL) + any security taken for some services - the amount for the number of days falling in the notice period - bond amount if applicable - any dues to the company.

Hope I covered most of the points. Please correct me where I'm wrong.

Best Regards

Farid 😂😂😛😛

Farid,

To understand the difference between CTC & Gross, you may please refer to Murali's reply to it. At a high level, CTC = Gross + Deductions.

Good Day,
Pradeep

CTC stands for Cost to the Company, which describes the total amount per annum. Gross refers to the total amount an employee takes home after the deduction of all benefits and other deductions.

When a person leaves the company, it is the company's responsibility to settle all outstanding payments to the employee. For example, if a person leaves the company in the middle of the month, they will receive half of their monthly salary. Upon leaving, the employee will receive the total amount due, any applicable termination benefits, etc.

Hi,

If an employee resigns without any notice period while going on long leave, for example, the employee submits a long leave application in advance, let's say on 23rd Jan, and wants to go on leave from 27th Jan to 12 Feb. Now, on 12th Feb, the employee sends a resignation by email, stating that they want to resign with immediate effect. In that case, what will be the employee's last date of working (DOL) that we can consider?

Thanks & Regards,
xyz 🤔

Dear Nidhi,

I hope you have received a sufficient reply. Enclosed herewith is a sample clearance form. Please review it to gain clarity on the full and final settlement process. Before finalizing the settlement, ensure that this form is filled out completely. Feel free to reach out for any further clarification.

Thank you.

Dear Sir,

Please help me with the full and final settlement of any employee not on the payroll working in the industrial organization from 02/05/07 to 25/08/09 and an increment in salary of approximately 1000 in 2 years, i.e., 3200 in 2007 to 4200 in 2009. Please guide me on how to calculate the full and final settlement of the employee.

It's urgent.

Regards,
Vishal

Hi,

Gross means regular monthly payable allowances like Basic, DA, TA, Conv, Spl. Allow and other allowances, etc.

CTC means - Gross + PF employer contribution + any other monthly reimbursements like LTA, Medical, Incentive, any Variable component, etc.

Thank you.

Full & Final Settlement Process

Hi Nidhi,

Full & Final settlement, also called FUFA, is done when an employee resigns or quits from his or her job. A No Due Certificate has to be issued from the immediate boss. Later, an EXIT interview has to be conducted, and the employee has to complete all the formalities. (This process may vary from company to company).

Understanding CTC and Gross Salary

CTC (Cost to Company) is a whole package that includes basic salary, DA, HRA, mobile, conveyance, and all other allowances included in the package. In other words, it's the total cost incurred by a company for hiring each employee.

Gross salary is before deductions, and deductions include provident fund, professional tax, and even loans, if any. Net salary is after deductions, also called take-home pay.

Note: MEMBERS IF I'M WRONG, PLEASE DO CORRECT ME.

With regards,
Murali

Hi,

I want to ask regarding the F&F settlement. I resigned from my PR company on 2nd July, but to date, I have not yet received any communication regarding the Full & Final Settlement, and I have not yet received a relieving letter. Also, as per the HR Policy, it should come in 45 days. But to date, nothing has come.

Can you please tell me what should be done in this case?

Thanks & Regards,
Ravikumar

Full and Final Settlement Process

Full and final settlement is done as follows:

1. Resignation from the employee should be submitted in writing.

2. Exit interviews and retention strategies are conducted by the HR department, such as improving job content, offering salary hikes, implementing bonds, providing promotions, and granting long-term leaves for employees who wish to pursue higher studies.

3. Finally, earning details, including bonus disbursement and incentives, should be calculated accurately.