Full & Final Settlement — every rupee, accounted for
Gratuity, leave encashment, notice pay, pro-rata bonus, and all statutory deductions — computed accurately on every employee exit. No spreadsheets, no litigation.
What goes into an F&F settlement
Every item below is a statutory or contractual obligation. Missing even one exposes you to wage claims, labour court proceedings, or interest penalties.
Salary dues
Days actually worked in the final month, computed as (monthly gross ÷ calendar days) × days worked. Includes all earned allowances and variable pay up to the last day.
Leave encashment
Earned / privilege leave balance × daily basic rate. Taxable above ₹3 lakh for non-government employees (₹25 lakh exemption limit for government employees under the new tax regime).
Gratuity
Payable after 5 years of continuous service. Formula: (Basic + DA) × 15 × completed years ÷ 26. Statutory ceiling ₹20 lakh. Must be paid within 30 days — 10% simple interest accrues thereafter.
Notice pay
Either recover notice pay shortfall from the employee (if they left without serving notice) or pay in lieu of notice as per the appointment letter or certified Standing Orders.
Pro-rata bonus
Under the Payment of Bonus Act, employees who have worked for part of the accounting year are entitled to a proportionate share of the bonus, calculated on the days of service rendered.
Reimbursement dues
All pending expense claims, LTA, and medical reimbursements that were approved but unpaid must be released as part of F&F — these are contractual obligations, not discretionary.
Deductions
Salary advance recovery, outstanding loan balance, professional tax for the partial final month, and any other dues recoverable under the employment contract or applicable law.
What OpticompBharat calculates automatically
Every component above is computed from your existing payroll and HR data — no re-entry required.
Automated gratuity & leave encashment
OpticompBharat reads the employee's joining date, basic + DA, and leave balance to compute both components in one click. No spreadsheet formulas, no manual cross-checks.
Pro-rata salary computation
Calculates exact days worked in the final month, applies the correct monthly gross, and deducts all statutory contributions (EPF, ESIC, PT, TDS) on the prorated figure.
Notice pay recovery / payment
Computes notice pay shortfall or in-lieu payment based on the configured notice period in the employee profile. Handles both recovery and outgoing payment scenarios.
Retrenchment compensation check
Flags employees with 1+ year of service in notified establishments and pre-calculates Section 25F retrenchment compensation (15 days' wages per year) so HR is never caught off-guard.
Statutory deadline tracker
Surfaces the applicable payment deadline (Payment of Wages Act, Gratuity Act, etc.) alongside the settlement summary so payroll never misses a legally mandated date.
One-click F&F payslip
Generates a structured, audit-ready Full & Final payslip PDF that itemises every component, deduction, and net payout — accepted by banks and government inspectors.
Statutory payment deadlines
Missing these deadlines triggers interest, penalties, or criminal liability under the respective Acts.
| Component | Statutory deadline | Consequence of delay |
|---|---|---|
| Salary dues & all other components | Last working day or within 2 working days of separation | Liability under Payment of Wages Act; employee can claim wages + 10× penalty |
| Gratuity | Within 30 days of becoming payable | 10% simple interest per annum on delayed amount |
| PF withdrawal / transfer | Member can apply any time; employer contributions accessible 2 months after exit | EPFO interest on undisbursed corpus; potential grievance filing |
| ESIC coverage | Coverage continues 6 months post-exit (IP benefit) | Employee retains medical and cash benefits during extended cover period |
Common F&F mistakes that lead to litigation
Forgetting pro-rata bonus
Many SMEs skip bonus for employees who leave mid-year. The Payment of Bonus Act entitles anyone who has worked 30+ days in the accounting year to a proportionate share — omitting it is a statutory violation.
Wrong leave encashment rate
Using gross salary instead of basic salary (or vice versa) as the daily rate can over- or under-pay by 30–60%. The correct divisor and base depend on your leave policy and appointment letter terms.
Missing retrenchment compensation
Section 25F of the Industrial Disputes Act applies to workers with 1+ year of service in industrial establishments. 15 days' average pay per completed year is mandatory — overlooking it leads to labour court disputes.
Delayed gratuity payment
The Gratuity Act's 30-day deadline is strictly enforced. Even a 31st-day payment triggers 10% simple interest — and repeated delays can invite inspection by the Controlling Authority.
Zero F&F errors from your first exit.
OpticompBharat computes every component automatically and surfaces the applicable statutory deadline before you release payment.