What to check, what to calculate, and how to close out an employee's exit cleanly.
An employee's last impression of your company is how their exit is handled. A clean, well-documented full and final settlement protects both sides and avoids drawn-out disputes.
Get this in writing and make sure attendance records are accurate right up to that date — see accurate attendance tracking.
Apply your written leave policy consistently — see how leave balances work — rather than negotiating case by case.
Check both directions: what the company owes the employee, and anything the employee still owes the company.
A settlement that's just one final number invites disputes. One that itemizes pay, encashment and deductions doesn't.
Most FnF disputes come from unclear records, not disagreement over the policy itself.
Full and final (FnF) settlement is the process of calculating and paying an exiting employee everything owed to them — pay up to the last working day, any unused leave encashment, and reimbursements — while also recovering anything owed to the company.
Confirm the last working day and attendance up to that date, calculate any leave encashment per policy, account for pending reimbursements or advances, and generate a final payslip that reflects all of it clearly.
Timelines vary by company policy, but settling within the following payroll cycle after the last working day is a common practice — delays are usually caused by unclear records, not the calculation itself.
Because Merik already holds accurate attendance, leave balances and CTC history for every employee, calculating a final settlement is a read of existing data — not a scramble to reconstruct records after someone has already left. See the payroll module.
The gratuity line has its own guide — formula, eligibility and worked examples, including the one-year rule for fixed-term staff.
What CTC really means and how monthly net pay is calculated.
How to organize your team before it gets messy.
15 ÷ 26 × last wages × years — plus rounding, the tax limit and the fixed-term rule.