The full form of FNF is full and final settlement. The full and final settlement (FnF) refers to the procedure of computing all outstanding payments owed to an employee who leaves the organization due to resignation, retirement, or termination by the management.
The settlement encompasses not only the employee’s salary but also includes deductions.
When an employee either voluntarily resigns or is terminated by the management, they receive their complete entitlements for their service up until their last working day, known as the full and final settlement (FnF).
This encompasses all additional earnings and deductions related to their employment.
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When does the full and final settlement occur?
It is important to understand that employees, whether resigning or being terminated, have the right to receive their dues in a timely manner. Typically, the full and final settlement process should be finished within a period of 30-45 days from the last working day of the employee.
If the employer fails to fulfill the FnF settlement within the stipulated time frame, the employee has the option to challenge it legally, and the employer will be held accountable for paying interest on the outstanding dues as a penalty.
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FnF Payslip Format
The FnF settlement letter is provided with reference to the resignation letter which is submitted by the employee.
There Is no fixed format for the FnF letter and sometimes firms just generate a payslip in place of the letter.
The details that should be included in the payslip are given below:
- Name of the employee
- Date of Resignation
- Employee ID
- Details of FnF settlement amount
- Reason for leaving
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Things to Keep in Mind
When calculating the FnF settlement amount, employers should consider the following aspects:
- Maintain clear records of all communications with the employee.
- Calculate the settlement value in accordance with relevant laws and regulations.
- Ensure that the FnF settlement is completed within a reasonable timeframe.
- Deduct TDS from incomes subject to taxation.
- Provide the employee with detailed calculations and an FnF settlement payslip for transparency and clarity.
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