Full and Final Settlement: It’s Not as Difficult as You Think
Full and final settlement commonly known as FnF process includes the procedures involved in releasing an employee from a company. These processes include exit interviews, documentation, arrears, deductions, earnings, receivables and pending salary.
FnF is a time consuming task for HR and the worst part is that there is always room for errors and delays. Though you might have your own checklist for conducting the final settlement at your workplace, here are four things to help you get through this quintessential HR process in smooth way:
- Monthly inputs
First things first. In order to have a streamlined settlement process, monthly inputs of employee must be performed even before processing the payroll every month. This is an important task, which needs to be done every month to avoid any miscalculation of deductions or earnings. This step involves adding any inputs to employee which can be incentives, LOPs, etc.
- Payroll process
After monthly inputs, you can now head towards payroll. Payslip often consists of information regarding every deduction or addition made into the salary, which makes way for transparent relation within departments.
Once you have done with payroll, you can now move onto full and final settlement of employees. This includes calculating the arrears to be paid, pending salary for worked days since resignation date and gratuity earnings (if eligible). Once payroll is performed, full and final settlement can be processed by calculating the total amount to be paid. Some companies follow the basic formula, wherein gross salary is being divided into working days of the month and multiplying the per day amount to the number of worked days after payroll has processed.
Suppose your company performs payroll on the 1st of every month and employee leaves on 10th of a month with gross salary of 30k, then the total amount to be made must be 10k excluding any deductions or earnings.
- Exit interviews and asset reclaim
Another core part of FnF are exit interviews and asset reclaim. When a person joins the company, he is assigned few assets namely laptop, phone, etc. Having a good HRMS software for full and final settlement would provide your HR with the feasibility to record all the asset information over the years mapping each employee that it has been assigned to. This avoids additional paperwork and makes it faster for the IT and the Admin teams to signoff.
Lack of an automated payroll software is the reason why many FnF processes are delayed leading to anguish and irked employees. An HR software allows you to perform all the mandatory steps for a smooth F&F at the click of a button. Every deduction including professional tax, Income Tax, TDS, gratuity, earnings like PF amount and calculating unused leaves PL are automatically calculated minus any error.
HR software not only gives you a 360-degree view of the entire full and final process of your employees, but it also gives you a detailed report of the entire full and final amount including recoverable and all. To know more about how Pocket HRMS can simplify full and final settlement for you, SMS SALES to 56767 or write to us at firstname.lastname@example.org