Full & Final Calculator

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Whenever an employee is resigning, retiring, or being dismissed by management, Full and Final Settlement takes place for their departure. It is practiced by processing all dues payable to and receivable from an employee. FnF calculator helps to calculate final settlement of an employee when he is leaving the organization.

An organization can take up to 20-30 days to complete the full and final settlement process because of various functions that take part in it.

Types of clearances in the FnF settlement process

While processing the FnF, components like arrears and other details are taken into account along with clearances from different departments.

  • Clearance from the HR

Functions like exit interviews, feedback chains, quality offboarding, etc., are brought to notice while calculating the full and final amount.

  • Clearance from the IT

Returning the assets like – laptop, mouse, keyboard, phone or sim, vehicle, etc., that were lent to you by the company fall in this category. Damages to assets will/can be recovered from the FnF amount.

  • Clearance from the admins

This usually includes reacquiring all access cards and physical IDs present with the employee with which they can gain access to places within the organization.

  • Clearance from the finance

From arrears to deductions to bonuses, etc., everything is taken into account.

List items included while calculating FnF

Various items must be included while calculating FnF. These items are:

1. Outstanding/Unpaid salaries

The salary due till the date of employee’s resignation is calculated along with benefits provided, such as LTA (Leave Travel Allowance) or any other arrears.

2. Bonuses and leave balance

All the leaves in balance, bonuses, etc., must be calculated and added to the FnF amount.

3. PF & Pensions

PF (Provident Funds) are deducted from the monthly salaries and deposited by the employers. When being relieved, the PF amount can be migrated as well, or if the employee wishes, it can be credited to their account.

4. Gratuity

Gratuity is granted only when an employee has completed their 4.5 years with a company. If the gratuity amount isn’t paid within a month of the employee’s relieving, then their employer is liable to pay interest on it.

5. Deductions

An employee’s income tax, provident fund, other taxes (as per policies), and balances due if the notice period was not served are noted. Earned leaves are encashed at this point, and gratuity is exempted from the due TDS.

When it comes to taxes, salaries up to 2.5LPA are exempted from paying tax, but above that income bracket are liable to pay around 5% tax, going up according to their package.

Formula to calculate FnF

To conclude, the FnF process consists of two things – the dues due to the employee and the dues that are to be recovered from the employee.

The amount due to the employee consists of:-

1. Relieving month salary

Salary for the month when the employee is leaving, is not paid generally like every month instead it is added to the FnF amount.

2. Notice period salary

Typically, the time period when an employee serves the notice period is the one where salary is not credited to them like normal. Instead that period’s salary is to be added in the FnF amount as well.

3. Earned leaves

Companies that have paid time off in their policies for their employees. Employees that have earned leaves in their leave balance stand to get them credited to their FnF amount.

Calculation of amounts payable:-

A fixed amount defined by the company i.e. per day basic:-

= (Number of unutilized earned leaves x Basic salary) ÷ Average paydays in a month

NOTE: The average paydays in a month are the number of days on which a company runs payroll calculations.

Example: If an employee’s Basic salary is Rs.10,000 and has a balance of 20 unutilized earned leaves, then earned leaves amount payable will be calculated as (20 x 10,000)/26 = Rs.7,692, considering there are 26 working days in a month, excluding the holidays.

LTA (Leave Travel Allowance)

LTA is the amount provided by the company to the employee for any official trips or vacations. Any unclaimed amounts of such benefits can be encashed during FnF if the company policies allows.

Gratuity

For detailed information, refer to our Gratuity Calculator 

Bonus

Any unpaid bonus or bonus declared by the organization but not paid yet is included in the FnF amount.

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