Manage notice buy-outs, and notice waivers easily
Auto calculate the leave balance encashments based on your company policies
Auto compute gratuity or other ex-gratia payments when an employee exits the company
Auto generation of detailed FnF slip and statements
Provide employees the option to submit their investment proofs for tax deduction consideration
Even after the employees have left the company,automatically email them their Form 16
Client's speak
Employees are the face of your organization. This is a fact largely understood but majorly undervalued. How your customer is taken care of is invariably chained by how the management treats the employees of the company. Right from employee acquisition to employee resignation, the HR has to weigh various options for the benefit of the workforce and provide many perks and bonuses to persuade the employees towards better performance and also boost their morale.
One such concrete element to ensuring proper employee life cycle management is full and final settlement. Employee full and final settlement is a process that occurs during the exit of an employee, that is, when an existing employee decides to resign from your organization. The employee undergoes this process at the resignation period, which estimates a final value to be given to the employee based on many factors that come into play. Full and final settlement becomes the final step of the way for the HR towards an individual employee.
Full and final settlement, also known as FnF settlement, is strictly followed by all business organizations to ensure proper measures are followed for employee welfare and growth. Although the purpose of an F&F settlement is to focus on the financial provision given to an employee at his/her very exit from the organization, it also seeks to provide many external contributions to the well-being of the employee. Properly handling the full and final settlement is an incredible gesture by the management towards the employees, which would be like honouring his/her services till then. In addition, an employee well dealt with by the previous company is likely to consider returning back at some point or at the very least refer their friends and other colleagues about the organization and its management.
Guaranteed, a full & final settlement settles scores with the employee planning an exit in a largely simplified manner, still there are a lot of components which makes up the full and final settlement with computations of its own.
The most crucial payment to settle in the process of final settlement is the remainder salary. Unpaid salary refers to the amount due to the employee according to the number of days he/she has worked after submitting the resignation letter. This amount is generally calculated from the date of submission of the resignation letter to the employee’s last working day at the organization. At instances where the employee salary is paid quarterly, the unpaid salary may consider payments of the previous several months. In addition to it, it also includes annual benefits such as the LTA (Leave Travel Allowance) and arrears of unpaid salary due from resignation date notice served, which are calculated as the number of days for which compensation is to be paid multiplied by the gross salary divided by 26 (paid days in a month).
Paid leaves, unpaid leaves and other bonuses related to it are tethered to being the perks of being an employee in the firm, and hence at the exit non-availed leaves, be it paid or unpaid should be cashed out to the employee. In fact, as stated by Section 79(11) of the Factories Act 1948, all unpaid leave dues are to be settled on or before the 7th and 10th of the following month of resignation. Furthermore as per Section 15(3) of the Karnataka Shops and Commercial Establishment Act all leave encashment dues should be settled by or before 10th of the following month. Similarly other bonuses and special credits offered are also encashed and added to the full and final settlement total.
Gratuity is basically a cash benefit that is given to the employees by the employers, like a token of appreciation. Section 7(3) of the Payment of Gratuity Act 1972 clearly states Gratuity should be offered within 30 days of the separation or else it will have to be paid with interest if 4 years and 240 days have been completed by the employee at the company.
In the case of organizations covered under ‘The Payment of Bonus Act’, employees are subjected to receive a statutory bonus along with other payments during the full & final settlement.
These are the components being debited from the employee during his/her departure. This includes employee’s Income Tax, Provident Fund and other professional taxes that are liable to be paid. It also considers compensation of notice period not served. All payments apart from earned leaves that are cashed and gratuity are attracted by TDS (Tax Deducted at Source).
Pension stretches out to the future aimed at the well-being of the employee in the long term. Generally, an employee who has completed a minimum of 10 years at the service of an organization doing ‘pensionable services’ is entitled for a pension. The pension can be availed during their retirement age, which is 58, by providing a Scheme Certificate.
Strictly by the rules, the full and final settlement has to happen on the employee’s last working day in the organization, or at the very least within 10 days from the last working day at the job. But generally, that tenure tends to extend since the process is time consuming. And since clearance usually takes that time, it is a company policy at most organizations to carry that time period to 30-45 days.
How they go about it step by step. The process of exit clearance begins by the employer a week prior to the going employee’s last working day. Communication regarding the exit is discussed by the employer and the going employee which would be mediated by a present employee, as this clearance process proceeds on the side.
With gratuity, the stipulation is 30 days after the exit from the company. Bonuses webbed in the full and final settlement of employee are usually paid during the specified accounting year.
Full & Final settlement is a very much systematic process with much of the focus steered at attention to details. In other cases, you are entitled to go through a cumbersome process of evaluating the employee performance and rounding a figure to bid the employee farewell. A lot of questions and problems would arise out of that scenario, right from the possibility for bias, inaccuracy and discrimination. At the very least it would put off the spirits of the going employee that he/she received no respect in the matter. With an FnF settlement, how you reached up to the figure you propose for your leaving employee is fairly clear, stated every step of the way.
When you clear out the formalities for a going employee, in a way you respect his/her tenure at the company and bid the best farewell. In addition, how you treat an immediately acquired ex-employee will set up an image for your current employees as to how they will be dealt with and taken care of later on.
Having the F&F settlement in the organization helps the company to abide by the set rules and regulations governing the actions of the industry. This way, it leaves no room for possible refutes by employees or others and get lawsuits on the company’s hands.
Ensuring the employee needs are met and that they are driven to complete their life cycle is truly the purpose of the HR department. Hence, by effectively managing the full and final settlement of the employee, the HR reinforces the trust kept in them and honour their position in the company.
Qandle makes it convenient to manage notice buy-outs and notice waivers easily. Rather than a critically tiresome procedure, the communication with the help of Qandle aims to be smooth flowing.
Based on the company policies, Qandle generates the automatically calculated figure regarding the leave balance encashments.
Similarly as with the leave encashments, the gratuity and ex-gratia payments are automatically calculated when an employee leaves the company.
With Qandle, you get auto generated FnF slip and statements.
One of the greatest disappointments during the procedure of FnF settlement can be the tax calculations and the subsequent tax deductions from the employee. Qandle offers an option where an employee’s investments can be submitted to review and influence change in tax deductions.
Even long after the exit of the employee, you can email them their Form16.
Full and final settlement of employee dominates a major share in the components of payroll processing. Qandle’s Payroll Software automatically syncs all related data necessary during the exit and auto calculates FnF amounts, as stated before.
