Definition
Full and Final Settlement
Full and final settlement (F&F) is the process of clearing all dues between employer and employee when employment ends, netting off salary, benefits and recoveries.
Full and final settlement (F&F) is computed when you leave a job. It sums up your outstanding dues — unpaid salary, leave encashment, gratuity (if eligible), pending reimbursements and any bonus — and subtracts recoveries like notice pay shortfall, advances or asset dues.
The employer issues the F&F statement and pays the net amount within a reasonable period, typically along with Form 16 for the year and relieving documents. TDS is applied where relevant.
Reviewing the F&F carefully ensures correct calculation of leave encashment, gratuity exemption and any wrongful deductions before you accept the closure.
Related terms
- GratuityGratuity is a lump-sum payment an employer gives an employee for long service, generally payable after completing five years, with tax exemption up to a prescribed limit.
- Leave EncashmentLeave encashment is payment received for accumulated unused leave, typically at retirement or resignation, with specific tax exemptions for certain employees.
- Notice Pay RecoveryNotice pay recovery is the amount an employer deducts when an employee leaves without serving the full notice period, effectively buying out the unserved notice.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.