Full & Final Settlement Calculator

⚡ In shortLeaving a job? Estimate your full-and-final settlement — pending salary, leave encashment, gratuity and any notice-period recovery — free and instant.

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How it is calculated

Pending salary is your daily rate (monthly ÷ 30) times unpaid days. Leave encashment is usually on Basic + DA for your leave balance. Gratuity, payable after five years of service, is 15 ÷ 26 × (Basic + DA) × years and is tax-free up to ₹20 lakh. Any short notice period is recovered at your daily rate. The exact components depend on your offer letter and company policy.

What the settlement should contain

A full and final settlement brings together everything owed at the end of employment, and the first useful step is knowing what should be on the list. Unpaid salary to the last working day. Encashment of accumulated leave, computed under the employer's policy and usually on basic plus dearness allowance. Gratuity, where five years of continuous service have been completed. Any bonus, incentive or reimbursement that has fallen due. Against that sit the deductions: notice period recovery where notice was not served, outstanding advances or loans, recovery for unreturned company property, and statutory deductions including tax. Ask for the computation in writing rather than a single net figure — most disputes about settlements are really disputes about one line item, and they are far easier to resolve when each component is visible and can be checked against your payslips and offer letter.

Gratuity has its own rules and its own exception

Gratuity is not part of the employer's discretion where the Payment of Gratuity Act applies, and it is computed by a formula rather than by policy: last drawn basic plus dearness allowance, multiplied by fifteen, multiplied by completed years of service, divided by twenty-six. Service of more than six months in the final year counts as a full year, which is why a departure date a few weeks either side of a threshold can change the amount materially. The usual condition is five years of continuous service, but there is an important exception: on death or permanent disablement the five-year requirement does not apply and the amount is payable to the nominee or heirs regardless of length of service. Payment is due within a prescribed period of it becoming payable, and interest is payable on delay as a matter of right rather than as a concession by the employer.

Leave encashment is taxed differently by employer type

The tax treatment of leave encashment depends on when it is received and from whom. Encashment during employment is fully taxable as salary in every case. Encashment at the time of retirement or resignation is exempt in full for government employees. For everyone else the exemption is limited, computed as the least of several prescribed amounts and subject to an overall lifetime ceiling that applies across all employers rather than per job — which means an employee who received exempt encashment on leaving an earlier employer has that much less available on the next occasion. Amounts beyond the exemption are taxed at slab rates in the year of receipt, and because a settlement often lands in a month with other terminal payments, the tax deducted can look disproportionate. It evens out when the return is filed.

Timing, and what to collect before you leave

Settlements are commonly expected within about thirty to forty-five days of the last working day, though the precise position depends on the employment contract and applicable state rules. Do not rely on collecting documents afterwards, because responsiveness drops sharply once you are off the payroll. Before your last day, obtain the relieving letter and experience certificate, the final payslip, Form 16 for the period worked, the leave balance statement, the gratuity computation, and confirmation that the date of exit has been marked in your provident fund record — that last one blocks any PF withdrawal claim until it is done and is among the most frequent causes of delay. Keep your resignation and its acknowledgement. If the settlement is delayed or an amount is disputed, a written request setting out each line item is the necessary first step before any escalation.

Notice pay, recovery, and what can be deducted

Where notice is not served in full, the employment contract usually permits recovery of pay in lieu, and this is the line item that generates the most disagreement. Two points are worth establishing early. First, what the contract actually says — the notice period, whether recovery is computed on basic or on gross, and whether unused leave can be adjusted against the shortfall, which many employers permit and few volunteer. Second, whether the incoming employer will buy out the notice, which is common at senior levels and should be settled before you resign rather than after. On the tax side, salary is generally taxed on receipt, and a recovery reduces what you receive rather than creating a separate deduction, so the treatment in the settlement should be visible on the computation. Deductions for company property, advances and loans are ordinarily legitimate; ask for each to be itemised.

If the settlement is delayed or refused

Escalate in writing and in order. Begin with a dated letter or email to HR and the reporting manager setting out each component claimed, the amount, and the basis for it, and ask for a written computation in reply — a specific request is much harder to leave unanswered than a general complaint. If gratuity is the disputed item, the statutory route is a claim to the controlling authority under the Payment of Gratuity Act, which sits within the labour department, is comparatively informal and inexpensive, and can order payment with interest. For wages and other dues, the appropriate forum depends on the nature of employment and the state, and a labour commissioner or the relevant industrial dispute machinery may apply. Keep the appointment letter, payslips, resignation and its acknowledgement, and the relieving letter together, and be aware that limitation periods apply to these claims.

How the settlement is taxed as a whole

A settlement typically lands in one month and can attract tax deduction at a rate that looks disproportionate, which is a cash-flow problem rather than a final answer. The components are treated differently. Unpaid salary is ordinary salary income. Leave encashment is exempt in full for government employees and subject to a limited, lifetime-capped exemption for others. Gratuity within the prescribed exemption is not taxable, and the ceiling applies across your career rather than per employer. Ex gratia and retrenchment compensation have their own rules. Because the whole amount arrives at once, the deduction at source can exceed the eventual liability, and the excess comes back as a refund when the return is filed. Where the settlement is large relative to the rest of the year's income, it is worth computing the year's tax properly before assuming the deduction is correct.

Frequently asked questions

Can unused leave be adjusted against a shortfall in notice period?

Many employers allow it, though few volunteer the option, so ask specifically. What governs is the employment contract: check the notice period, whether recovery is computed on basic or gross, and whether leave adjustment is permitted. Settle a notice buy-out with an incoming employer before resigning rather than after.

What if my employer delays the settlement?

Write to HR setting out each component and the basis for it, and ask for a written computation. For gratuity specifically, a claim lies to the controlling authority under the Payment of Gratuity Act, which can order payment with interest. Keep your appointment letter, payslips, resignation and relieving letter.

Is leave encashment taxable when I resign?

It is fully exempt for government employees. For everyone else the exemption is limited and subject to a lifetime ceiling that applies across all employers rather than per job, so earlier exempt encashment reduces what remains available. Amounts above the exemption are taxed at slab rates.

What is included in a full and final settlement?

Usually pending salary, leave encashment, gratuity (after 5 years), any bonus due, minus deductions like notice-period recovery and outstanding advances.

When should F&F be paid?

Company policy and many state rules expect F&F within a reasonable period (often around 30–45 days) of the last working day. Check your employment terms.

Is this an exact figure?

No — it is an estimate before tax. TDS may apply; gratuity is tax-free up to ₹20 lakh. Verify against your payslip and offer letter.