Full & Final Settlement Calculator

What Goes Into F&F

A full and final settlement bundles together everything owed to a departing employee: pro-rated salary for days actually worked in the final month, leave encashment for unused leave, gratuity (if 5+ years of service is completed), any pending bonus or incentive, minus deductions like PF, notice-period shortfall recovery, and any outstanding loans or advances. Missing any one component is a common source of disputes, which is why itemizing each piece separately (as this calculator does) is worth doing rather than accepting a single lump-sum figure from HR without a breakdown.

The relative weight of each component shifts a lot depending on how long someone stayed and how much of their pay was structured as basic versus variable pay. A short-tenure exit is usually dominated by pro-rated salary and leave encashment, since gratuity hasn't kicked in yet and there's rarely a large pending bonus. A long-tenure exit, by contrast, is often dominated by gratuity, which is why getting the years-of-service figure exactly right — including the extra months — matters more the closer someone is to a service milestone.

Does the Separation Type Change What You're Owed?

The core arithmetic behind pro-rated salary, leave encashment, and gratuity doesn't change based on whether the exit is a resignation, a termination, or a retirement — each of these is still computed the same way once the eligibility conditions are met. What does change is which components come into play and how notice-period obligations are treated. A resignation typically requires the employee to serve (or pay in lieu of) the notice period specified in the appointment letter. A termination initiated by the employer more often comes with the employer paying notice pay in lieu, rather than recovering a shortfall from the employee, though the exact obligation depends on the grounds for termination and the terms of the contract. A retirement usually removes notice-period questions altogether and can also trigger additional retirement-specific benefits, such as leave encashment treatment or pension-scheme payouts, that don't apply to a resignation or termination.

Because the label attached to an exit can change which clauses of the appointment letter or company policy apply, it's worth reading the specific separation letter rather than assuming the standard treatment used by this calculator covers every nuance of your situation — particularly around notice pay and any severance beyond the statutory components modeled here.

Worked Example

₹30,000 last drawn basic, ₹55,000 last drawn gross, 6 years of service, 15 of 30 days worked in the final month, 12 encashable leaves, full notice period served:

Gratuity dominates this settlement once the 5-year eligibility threshold is crossed — dropping just below 5 years of service would zero out this entire component, which is why the exact service duration (including the final partial year) matters so much for anyone near that boundary. Note also that the PF deduction shown here is only the employee's own contribution recovered for the final month — it isn't a withdrawal of the full accumulated PF balance, which is settled separately through the retirement fund body rather than through the employer's F&F worksheet.

The TDS Estimate Is Rough, Not Exact

This calculator flags a rough TDS estimate (a flat 10% on the taxable portion) once your annualized taxable settlement crosses ₹5,00,000, as a simple threshold check — it doesn't run your actual slab-based tax calculation, factor in your other income for the year, or account for the specific TDS rules that apply to each F&F component individually (salary TDS follows slabs, while other components may have their own treatment). Treat this as a rough flag that TDS is likely relevant, not a precise deduction figure.

Notice Period Shortfall Cuts Both Ways

If you leave before serving your full notice period and your employer doesn't waive it, the shortfall is typically recovered from your settlement at your daily gross rate — this can meaningfully reduce your net payout if you're leaving on short notice. Conversely, some employers owe you for notice period they choose not to have you serve (garden leave or immediate relief) — check your specific appointment letter and company policy on how notice shortfalls or waivers are actually handled before assuming this calculator's default treatment applies to you.

It's also worth checking whether your notice period is defined in calendar days or working days, since that distinction alone can shift the recovery amount — a 30-day notice period measured in calendar days covers weekends within it, while one measured in working days would run longer in real time. Some employers also allow adjusting unused leave against a notice shortfall instead of a straight cash recovery; whether that's available to you is a matter of company policy, not a statutory right, so confirm it with HR before assuming it will apply.

Gratuity: Eligibility and How the Amount Is Worked Out

Gratuity becomes payable once an employee completes at least 5 years of continuous service with the same employer (this minimum is waived if service ends due to death or disability). Where it applies, the common formula used for employees covered under the Payment of Gratuity Act is: last drawn basic salary (plus dearness allowance, where applicable) × 15 × number of completed years of service, divided by 26 — the 26 representing the assumed number of working days in a month and the 15 representing half a month's wage for each year served. This calculator rounds the service period to the nearest whole year for this formula, which matches how gratuity is commonly computed in practice, though some employers may apply their own rounding convention.

Gratuity received is tax-exempt up to a notified ceiling — this calculator applies a cap of ₹20 lakh, which is the figure commonly cited for private-sector employees covered under the Act. Amounts above that ceiling are added to taxable salary income for the year. Because the ceiling and the formula both matter, and because gratuity can be a large chunk of the settlement once the 5-year threshold is crossed, it's worth double-checking your specific entitlement against your employer's gratuity policy or trust rules rather than relying only on the formula figure.

How Each Component Is Taxed

Not every rupee in an F&F settlement is taxed the same way — some components are fully taxable as salary, others carry their own exemption up to a ceiling, and a few (like reimbursement of amounts you'd already paid for, such as an expense claim) may not be income at all. Broadly:

This table is a general guide, not a substitute for checking the specific rule that applies to your situation — PF taxation in particular has several conditions attached to the 5-year exemption, and the exact treatment can shift depending on whether the withdrawal is from a recognized or unrecognized provident fund.

Typical Timeline for Receiving Your Settlement

There's no single, universally mandated deadline for F&F settlement under central law that applies uniformly to every employer and every state — some state Shops and Establishments Acts specify their own timelines, and many companies set an internal policy, commonly somewhere in the 30 to 45 day range from the last working day, as a practical target. If your settlement stretches well beyond that window with no explanation, check your state's specific wage payment rules and the notice period or exit clauses in your appointment letter — and consider escalating in writing to HR before assuming there's nothing you can do.