What is full and final settlement?

What goes into the settlement

On the payment side: salary for the days worked since the last run, leave encashment where the contract or law pays unused leave out, any end-of-service gratuity or provident-fund dues, and bonuses or claims still outstanding. On the recovery side: loan and advance balances, equipment not returned, pay for notice the leaver did not serve, and income tax where it applies.

If recoveries are larger than payments, the net is negative and the leaver owes the employer the difference. Which lines apply, and how each is worked out, comes from the employment contract and the law where the person works rather than from one universal rule.

When it has to be paid

Deadlines are local. Under the UAE Labour Law, for example, the employer pays the worker’s wages and every other entitlement, gratuity included, within 14 days of the contract ending. Elsewhere the contract or company policy usually sets the date. Whatever the rule, a settlement that is shown line by line, with the basis of each figure, is the one least likely to be disputed — the final settlement calculator works that way, and how to calculate a full and final settlement walks through a case.

Final settlements in Ledgr

In Ledgr a settlement is one statement per leaver, made of sections with their formulas beside them. The leave balance is prefilled from the year’s entitlement, the months worked and the leave already taken, and can be overridden; notice shortfall is entered in days; loans are recovered from their balance; other payments and recoveries are added as labelled lines. The final month’s salary is paid either by the statement or by the payroll run, never by both.