FnF full form is Full and final settlement and it is something that happens when an employee quits a job or their employment is terminated and they are let go by the employers. In full and final settlement the management pays off all the dues for the services offered by the employee until their last working day. The settlement also incorporates earnings and extra earnings.
What are some of the major steps of the full and final settlement?
In this phase, the employee is required to return all the company assets like laptop or any other form of computer hardware. In case the asset is damaged then based on the damange an amount is deducted from the full and final settlement. In the companys employee tracker the employee’s accounts status is changed to resigned/removed and their email id may or may not be ratined based on the company policy.
In this step all the outstanding reimbursements, or expenses are taken care off and cleared. Following are some of the most crucial components of the employee finance that the human resources department needs to take care off:
In accordance with the payment of wages act 1936 the salary of an employee for the previous month must be paid by the 7th or 10th of the next month. However, in case an employee resigns from the job, the salary is to be calculated upto the date of resignation and paid in the full and final settlement. Unpaid salary includes everything from LTA and arrears to annual benefits. However, since most of the benefits are annual in nature, the liability only extends upto the last working day of the employee. Since the salary calculations are more or less uniform in different companies the human resource team generally use the basic salary calculation formula to estimate your outstanding salary.
Unpaid Leaves and Bonus
In accordance with the Factories Act 1948, in case the employee has unavailed leaves or bonuses then that needs to be cleared by the 10th of the next month post resignation. The policies regarding leaves and the type of leaves varies across different companies based on the company policy. This is why the leave encashment policy varies in different companies and how it play out in the full and final settlement also varies. Similarly bonuses are also paid in the full and final settlement
Employee provident Fund
Provident fund is an investment fund where some money is credited after being deducted from the salary every month. It is a long terms saving fund. If the employee is switching to a new job then the pf pension fund is transferable to the new employer. However, if the employee is retiring , the fund balance is paid to the employees in full.
In accordance with the payments of gratuity act, any employee who has served for 4 years and 10 months will get gratuity within 30 days. However, if there is any delay in payment of gratuity in FnF settlement after 30 days, then an interest is payable to the employee.
In this step, the employee is required to submit their employee ID card or key fobs that are used for access. This is also the step where the employee access to company building gets revoked.