Gratuity and Other Final Settlement
- Gratuity Eligibility and Calculation
- Eligibility: Employees who have completed at least 5 years of continuous service with the same employer are eligible for gratuity, as per the Payment of Gratuity Act, 1972.
- Calculation: The gratuity amount is calculated as: Gratuity=26Last Drawn Salary×15×Years of Service
- Here, Last Drawn Salary includes basic salary and dearness allowance.
- Gratuity is capped at ₹20 lakhs, subject to revisions by the government.
- Final Settlement Process for Resigned or Retired Employees
- Documentation: Ensure submission of a formal resignation letter or retirement notice.
- Settlement: Includes unpaid salary, leave encashment, bonuses, gratuity, and any other dues.
- Process:
- HR reviews and processes the full and final settlement within 30-45 days.
- The finance team calculates the dues and deductions.
- Employees receive a detailed statement outlining the settlement amount.
- Full & Final Settlement (FNF) and Compliance
- FNF Compliance: Ensure compliance with labor laws, tax deductions, and provident fund rules.
- Deductions: May include pending loans, advance payments, or notice period deductions if applicable.
- Payment Timeline: According to compliance guidelines, the FNF settlement must be processed within 30 days post exit to ensure legal compliance and employee satisfaction.
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