Full and Final Settlement: What You Get and When
In short: your F&F includes unpaid salary, leave encashment, bonus, gratuity (if eligible) and pending reimbursements, minus any notice-period recovery, loans and tax. Under the Code on Wages, wages must be paid within two working days of leaving; gratuity within 30 days.
Hinglish me: Job chhodne par bachi salary 2 working days me aur gratuity 30 din me milni chahiye. Notice period kam kiya to recovery kat sakti hai.
What is included
| You receive | You may have deducted |
|---|---|
| Salary for days worked in the last month | Notice period shortfall (if you did not serve full notice) |
| Leave encashment for unused earned leave | Outstanding salary advance or loan |
| Statutory or performance bonus due | Excess leave taken |
| Gratuity, if you completed 5 years (1 year for fixed-term staff) | Unreturned company assets |
| Pending reimbursements and arrears | Income tax (TDS) on the whole amount |
The timeline
- Wages: two working days. Section 17(2) of the Code on Wages, in force since 21 November 2025, says wages due must be paid within two working days of resignation, removal, dismissal, retrenchment or closure.
- Gratuity: 30 days from the date it becomes due, with interest if it is late.
- PF: not part of the employer's F&F. You transfer it to your new employer or withdraw it through EPFO.
Two questions are still being argued: whether the two days start from the date you resign or your last working day, and whether leave encashment must also be paid within two days. Many companies still pay F&F in their next payroll cycle. If yours takes longer than a month, ask HR in writing which rule they are following.
Worked example
Priya earns a gross salary of ₹45,000 a month, of which basic is ₹22,500. Her last working day is 18 June. She has 12 days of earned leave left and served 10 days less than her notice period. Her company encashes leave on basic pay, recovers notice shortfall on gross pay, and uses a 30-day month.
| Item | Calculation | Amount |
|---|---|---|
| Salary for 1 to 18 June | ₹45,000 × 18 ÷ 30 | ₹27,000 |
| Leave encashment | ₹22,500 ÷ 30 × 12 | ₹9,000 |
| Less: notice shortfall | ₹45,000 ÷ 30 × 10 | − ₹15,000 |
| F&F before tax | ₹21,000 |
She has worked only 3 years, so no gratuity is due. Her PF is handled separately through EPFO. Company policies differ on whether leave and notice recovery use basic or gross pay and a 26 or 30-day month, so check your appointment letter.
Tax on F&F
Salary and bonus in your F&F are taxed like normal salary. Leave encashment on resignation or retirement is exempt for private-sector employees up to the lowest of four limits, with a lifetime cap of ₹25 lakh (see our leave encashment guide). Gratuity is exempt up to ₹20 lakh in your lifetime.
If your F&F is delayed
- Email HR with your last working day, your exit clearance and the amount you expect.
- Keep copies of your appointment letter, resignation acceptance and last three payslips.
- If there is no response, you can approach the labour department of your state (the Inspector-cum-Facilitator under the new codes) with a complaint about unpaid wages.
Leaving after five years or more? Check how much gratuity is due to you.
Gratuity CalculatorSources and where to verify
This guide is for general information and planning only, based on rules as reported up to 9 November 2026. Rules change, so confirm with the official source, your employer or institution, or a qualified adviser before you act on it.
Frequently asked questions
How many days does full and final settlement take?
Under the Code on Wages, wages due must be paid within two working days of leaving. Gratuity must be paid within 30 days. In practice many companies still settle in the next payroll cycle.
Is PF part of full and final settlement?
No. PF is held by EPFO. You transfer it to your new employer or apply to withdraw it yourself.
Can a company deduct notice pay from F&F?
Yes, if your appointment letter allows it and you did not serve the full notice period. The amount depends on company policy, usually basic or gross pay for the shortfall days.
Is leave encashment in F&F taxable?
For private-sector employees, leave encashment on resignation or retirement is exempt up to the lowest of four limits, with a lifetime cap of ₹25 lakh. Encashment while still in service is fully taxable.