Full and final settlement
When an employee leaves, you close their account with one final payout — the full and final (F&F) settlement. It adds up everything you still owe them, subtracts anything they owe you, and lands on a final figure.
Webelio builds the F&F as part of payroll for the leaving employee.
What goes into the settlement
Amounts owed to the employee
| Item | What it is |
|---|---|
| Pending salary | Pay for the days worked in the final month. |
| Leave encashment | Unused Earned Leave paid out as cash, at the caps set on the leave type. |
| Gratuity | A thank-you payment for long service — payable after 5 years. See gratuity. |
| Statutory bonus | The year's bonus, pro-rated, if the employee is eligible. |
| Pending arrears / reimbursements | Anything still owed from before. |
Amounts recovered
| Item | What it is |
|---|---|
| Notice-period shortfall | If the employee left without serving full notice, the shortfall can be recovered. |
| Outstanding loan or advance | Whatever's left on a staff loan is cleared in one go. |
| Income tax (TDS) | Tax due on the settlement amounts. |
Net F&F payable = amounts owed − amounts recovered.
Leave encashment at exit
Encashment is where unused Earned Leave turns into cash. It's the one leave type Indian law requires you to pay out when someone leaves. Webelio uses the encashment cap and the minimum-balance-to-keep that you set on the leave type — see leave types and policies. (Casual and Sick leave normally aren't encashable.)
Gratuity
Gratuity is payable to employees who complete 5 years of continuous service. It's calculated from the last drawn Basic and the years served, and it's tax-free up to ₹20,00,000 for private-sector employees. If your CTC includes a gratuity provision, the company has been setting this aside all along. Full details in gratuity.
Notice-period handling
If the employee didn't serve their full notice, you can recover the shortfall in the settlement — typically the pay for the un-served days. If they served notice fully (or you waived it), there's nothing to recover.
A full and final settlement closes out the employee. Check the leave balance, loan balance, and notice details before you finalize — once settled and paid, it's the last payroll for that person.
What's next
- Understand gratuity in full: gratuity
- Set encashment rules: leave types and policies
- Close the leave year for everyone else: year-end processing