Hi, I would like to inquire about certain information regarding Full and Final Settlement. There was an employee who was terminated during his probation period, and according to the policy, we proceeded with his Full and Final Settlement. We tried to contact him twice.
During the first meeting, he did not show up, and the second time he came, he was not ready to accept certain deductions as per the company policy. We also sent him a MOM.
My question is, until what time should we hold his Full and Final Settlement, or should we proceed and send him a mail revoking the settlement process?
Thank you.
From India, Mumbai
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2During the first meeting, he did not show up, and the second time he came, he was not ready to accept certain deductions as per the company policy. We also sent him a MOM.
My question is, until what time should we hold his Full and Final Settlement, or should we proceed and send him a mail revoking the settlement process?
Thank you.
From India, Mumbai
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Dear Trupti,
Understanding F&F Settlement
The term "F&F Settlement" refers to the settlement of all dues to an employee consequent to the termination of their employment. Apart from the wage/salary due for the last wage period up to and inclusive of the date of termination, the components of statutory terminal dues and the time limit for their disbursement depend on the nature of termination. These components include leave salary, unpaid bonus, gratuity, notice pay, and/or retrenchment compensation as applicable.
Components of F&F Settlement
In the case of discharge simpliciter as per the contract of employment, notice salary must be paid if no notice is issued by the employer. In the case of resignation or dismissal, leave salary for the earned leave at the credit of the employee and proportionate bonus for the service rendered in the accounting year, if eligible, must be paid in addition to other terminal benefits. In the case of retrenchment, retrenchment compensation at 15 days' average pay for every year of completed service should be paid in addition to other terminal benefits at the time of retrenchment itself.
Payment Timeline for F&F Settlement
In the case of retirement upon reaching the age of superannuation, all dues, including gratuity, should be paid. Regarding the time limit for actual payment, notice pay and retrenchment compensation should be paid on the same day. Gratuity should be paid within 30 days of termination of employment, and in case of any dispute, the amount as per the employer's calculation should be deposited with the Controlling Authority under the Payment of Gratuity Act, 1972, within the same period. The bonus for the accounting year can be paid after its declaration but before the expiry of 8 months from the close of the accounting year.
Handling Disputes in F&F Settlement
If the ex-employee fails to turn up or refuses to receive the amounts due to miscalculation, you can send them a memo explaining the correctness of your calculation and set a deadline for them to receive the amount on proper vouchers. Failing this, you would be at liberty to deposit the amounts as per law. If there is a provision in your State Labor Welfare Fund Act, you can remit all amounts other than gratuity into the unclaimed amounts account of the Welfare Board under intimation to the ex-employee.
From India, Salem
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Understanding F&F Settlement
The term "F&F Settlement" refers to the settlement of all dues to an employee consequent to the termination of their employment. Apart from the wage/salary due for the last wage period up to and inclusive of the date of termination, the components of statutory terminal dues and the time limit for their disbursement depend on the nature of termination. These components include leave salary, unpaid bonus, gratuity, notice pay, and/or retrenchment compensation as applicable.
Components of F&F Settlement
In the case of discharge simpliciter as per the contract of employment, notice salary must be paid if no notice is issued by the employer. In the case of resignation or dismissal, leave salary for the earned leave at the credit of the employee and proportionate bonus for the service rendered in the accounting year, if eligible, must be paid in addition to other terminal benefits. In the case of retrenchment, retrenchment compensation at 15 days' average pay for every year of completed service should be paid in addition to other terminal benefits at the time of retrenchment itself.
Payment Timeline for F&F Settlement
In the case of retirement upon reaching the age of superannuation, all dues, including gratuity, should be paid. Regarding the time limit for actual payment, notice pay and retrenchment compensation should be paid on the same day. Gratuity should be paid within 30 days of termination of employment, and in case of any dispute, the amount as per the employer's calculation should be deposited with the Controlling Authority under the Payment of Gratuity Act, 1972, within the same period. The bonus for the accounting year can be paid after its declaration but before the expiry of 8 months from the close of the accounting year.
Handling Disputes in F&F Settlement
If the ex-employee fails to turn up or refuses to receive the amounts due to miscalculation, you can send them a memo explaining the correctness of your calculation and set a deadline for them to receive the amount on proper vouchers. Failing this, you would be at liberty to deposit the amounts as per law. If there is a provision in your State Labor Welfare Fund Act, you can remit all amounts other than gratuity into the unclaimed amounts account of the Welfare Board under intimation to the ex-employee.
From India, Salem
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Full n final settlement.doc