Finally it is the time to process the employee’s full and final settlement. Final settlement is the procedure required to be followed by the employer after the employee has resigned and or terminated from the organization. The process is sometime tedious to the HR,
There are a lot of components that go in to this particular process. We take a look at some of the most important ones:
- Unpaid Salary: This includes the unpaid salary for the number of days for which the employee has worked for, since his last payroll was processed or the resignation/termination date and his last working day. Unpaid salary includes all components of payroll, including any , reimbursements, deductions and bonuses.
- Leave Dues: Any leaves which were due i.e. Annual / Vacation and have not been taken, generally would be encashed during the final settlement.
- Redundancy Pay: Certain organizations also pay a fixed amount which is usually 3 months salary, as a redundancy pay if they terminate an employee under certain circumstances, this is also added to the settlement.
- Deductions Repayment: Any outstanding loans which have been advanced to employees have to be generally fully repaid from the final settlement amount due to the employee.
- Assets Return: Any assets like company accommodation, laptops, smartphones, car, which have been provided, are generally returned by the employees before the final settlement has been processed and paid out.
- Gratuity or End of service benefits: Amounts payable are usually calculated depending on the law of the country or region the organization is operating in, if employee is applicable for pension, they would generally not get gratuity or end of service benefits. Calculations are based on multiple parameters i.e. length of service, whether the employee reigned or was terminated other contractual considerations.
- The Final Payment: Finally the amount calculated is paid through the bank in a specific format as required by local laws for each region or country the organization is operating in.
HR Chronicle also gives you the ability to run Employee Exit Checklists, when employee is no longer employed by the organization, it is a step by step procedure, to help keep your employee exit process in compliant with local regulations and company policies.
Once the final settlement has been processed, a statement is generated with all relevant details, so it can be signed by the employee in original and archived for records.
Most Companies are not sure about how Final Settlement process should work and what information it should entail. Their process is mostly manual, it is important to be on the right side of the law, no organization would want to be in legal trouble with an ex-employee.
With HR Chronicle, this complete process is in just 2 clicks of the button and your final settlement will be done in less than a minute. Based on the policy setup, final settlement is generated automatically and you can also automatically generate the final settlement statement for the employee. HR Chronicle’s strong reporting tool helps you get the desired report for the final settlement.
Contact us to know how HR Chronicle can help standardize your compliance for Final Settlement Process