The process that takes place when an employee chooses to leave a company or is fired by their employer is known as Full and Final Settlement in payroll, or FnF Settlement. In this situation, the employer is required to pay the entire amount owed, including any bonuses or incentives.
Paying all outstanding employee payments, such as retirement benefits, bonuses, gratuities, incentives, etc., is the importance of this settlement policy. On the end day of an employee’s employment, the complete and final settlement procedure must take place. Clearance, though, takes time. Clearance often occurs 30 to 45 days following the employee’s last day of employment.
The FnF Settlement Process
The “Resignation Letter,” which must be in writing, is the first step in the settlement process. An acceptance letter for the employee’s resignation will be sent by management after the resignation letter has been sent to the employer. The employer requests that an employee sign a departmental no-dues certificate and turn it in to HR along with the acceptance letter. HR will prepare the FnF statement, which will thereafter be forwarded to the Accounts department for additional processing. A service certificate is then given to the employee and HR after the accounts department produces a check for the amount owed.
Key elements of FnF
- Gratuity Deductions
- Unpaid Salary Leave Encashment
- Daily bonus
- base pay
- incentives
