Full and Final Settlement Format

Full and final settlement format

Example figures: monthly gross ₹60,000 (basic ₹30,000), last working day 20 October 2026, 12 days' earned leave balance, 8 years 7 months of service, 10 days of notice not served.

[COMPANY NAME]
FULL AND FINAL SETTLEMENT STATEMENT

Employee name: [NAME]            Employee code: [CODE]
Designation: [DESIGNATION]       Department: [DEPARTMENT]
Date of joining: [15/03/2018]    Last working day: [20/10/2026]
Reason for exit: [Resignation / Retirement / Termination / End of fixed term]
Resignation date: [DATE]  Notice required: [30] days  Notice served: [20] days
PAN: [PAN]   UAN: [UAN]   Bank A/c: [XXXXXX1234]

A. EARNINGS                                               Rs.
1. Salary for 1-20 October 2026 (60,000 x 20/31)        38,710
2. Leave encashment: 12 days x (30,000 / 26)            13,846
3. Gratuity: 15/26 x 30,000 x 9 years                   1,55,769
4. Statutory bonus (pro rata, if eligible)               [ ]
5. Reimbursements pending (approved claims)              [ ]
6. Arrears / incentives due                              [ ]
TOTAL EARNINGS (A)                                       [ ]

B. DEDUCTIONS                                             Rs.
1. Provident fund 12% on wages for the month               [ ]
2. ESI 0.75% (if covered)                                  [ ]
3. Professional tax                                        [ ]
4. Notice-period shortfall: 10 days x (60,000 / 30)     20,000
5. Salary advance / loan outstanding                       [ ]
6. Company assets not returned (as agreed in writing)      [ ]
7. Income tax (TDS)                                        [ ]
TOTAL DEDUCTIONS (B)                                     [ ]

NET AMOUNT PAYABLE (A - B): Rs. [ ] (Rupees [IN WORDS] only)
[OR NET AMOUNT RECOVERABLE FROM EMPLOYEE: Rs. [ ]]

Payment: by bank transfer on [DATE], reference [UTR]
Wages paid within two working days of [LAST WORKING DAY]: [YES]
Gratuity paid on: [DATE] (within 30 days)
PF exit date updated on EPFO portal: [DATE]
Form 16 for the tax year will be issued by: [15 JUNE 2027]

Prepared by: [HR]   Checked by: [FINANCE]   Approved by: [AUTHORISED SIGNATORY]

EMPLOYEE ACKNOWLEDGEMENT
I have received the above amount towards my full and final settlement. [I have the following claims, if any: ________]
Signature: ______________   Name: [ ]   Date: [ ]

How to fill it

1. Salary: monthly gross × days worked ÷ days in the month (or your payroll's standard divisor, applied consistently).
2. Leave encashment: earned leave balance × daily rate. Many employers use basic ÷ 26 or ÷ 30; follow your policy and any State Act rule.
3. Gratuity: 15 ÷ 26 × last drawn basic + DA × years, with a part year over six months counted as a full year. 8 years 7 months counts as 9. Use the gratuity calculator.
4. Notice recovery: only as the appointment letter allows, and only for days not served and not waived.
5. TDS: recompute the year's tax including leave encashment and any taxable gratuity, and deduct the balance.

Common mistakes

• A 45 to 90 day F&F cycle. The two-working-day rule in the Code on Wages applies to resignations as well as terminations.
• Withholding the whole F&F because assets are pending. Deduct an agreed amount, or recover separately; holding all dues breaches the payment rules.
• Recovering more than 50% of wages for the period through deductions.
• Leaving gratuity out because the employee resigned. Resignation after five years qualifies; fixed-term staff qualify after one year.
• Asking the employee to sign a blanket waiver of all claims in exchange for dues already owed. Courts give such waivers little weight.

Legal points

From 21 November 2025, section 17(2) of the Code on Wages, 2019 requires wages payable to an employee who is removed, dismissed, retrenched, has resigned or became unemployed due to closure to be paid within two working days. The appropriate government can prescribe a different period, and some States' rules are still being finalised, so check your State's rules. Gratuity is due within 30 days under section 56(3) of the Code on Social Security, 2020, with simple interest after that. Under the OSH Code, leave to a worker's credit is encashed on separation. For retrenchment of a worker with one year's service, the Industrial Relations Code, 2020 adds notice or wages in lieu, retrenchment compensation of 15 days' average pay for each completed year, and a contribution to the worker re-skilling fund.

FundRaksha HR computes the F&F from attendance, leave balance and salary history, includes gratuity and recoveries, and timestamps payment so you can show the two-day rule was met. Pair it with the relieving letter and experience letter.

Sources

• www.labour.gov.in/static/uploads/2025/06/c328da14bbb15fc4ad571dc33e7a4ab3.pdf
• www.labour.gov.in/static/uploads/2026/02/83978455025732b99b0165def80ab171.pdf
• www.labour.gov.in/static/uploads/2025/07/b0620548445580767b5c0d18c95c26f7.pdf
• www.labour.gov.in/static/uploads/2026/03/a4ccf4c6d97c4f1f36a6d83f8c64213d.pdf