When an employee leaves, every payable and recoverable has to be settled. A structured F&F prevents disputes and tax mistakes.
Components
| Item | Direction | Note |
|---|---|---|
| Pending salary up to last day | Payable | Pro-rata for part month |
| Leave encashment | Payable | As per policy |
| Notice pay | Recover or pay | Shortfall or buyout |
| Gratuity | Payable | Generally after 5 years of service; rules can change under Labour Codes |
| Bonus | Payable | If eligible |
| Loans and advances | Recover | Outstanding balance |
| Asset or other dues | Recover | As per policy |
| Tax | Deduct | TDS on the final amount |
Sample gratuity formula
For employees covered by the Payment of Gratuity Act, gratuity is commonly computed as last drawn basic (plus DA) × 15 ÷ 26 × years of service. Confirm eligibility and current rules before paying.
Timeline
Settle within the period required by law or your policy, commonly within 30 to 45 days of leaving. Verify applicable limits.
Checklist
- Resignation accepted and last working day fixed
- No-dues from departments
- Leave balance and encashment computed
- Loan balance closed
- Gratuity and bonus assessed
- Tax calculated
- Relieving letter and Form 16 data prepared
- Payment recorded and bank file generated
See F&F settlement software and TDS on salary.
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