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Full and Final Settlement 

When an employee resigns or retires, the company settles the dues after considering loans, deductions and fines, to name a few. The employee has to get a clearance from different departments before leaving. This process is called Full and Final Settlement or FnF.

The full and final settlement process is mandatory to:

  • Avoid billing the separated employee
  • Accurately calculate tax and other payments like incentives and reimbursements

The dues include the salary for the last month plus any additional pending payments. The leave balance is also considered for calculating the LOP or eligible encashment. During this stage, the employer also takes back all the company-owned assets before relieving the employee.

Referred in
Full and Final Settlement