F&F Settlement Calculator India — Full and Final Dues on Exit

What full and final settlement actually covers

A full and final settlement is the closing account between an employer and a departing employee. It is not a single statutory entitlement but a bundle of heads, each with its own source. Salary for days worked and pending reimbursements are contractual, though the time for paying wages is fixed by statute. Leave encashment comes from the state Shops and Establishments Act, the Occupational Safety, Health and Working Conditions Code 2020 for factories, or the contract, whichever is more favourable. Gratuity comes from the Code on Social Security 2020. Statutory bonus comes from the Code on Wages 2019. Retrenchment compensation, where the exit is a retrenchment, comes from Section 70 of the Industrial Relations Code 2020. Notice pay is contractual, subject to the statutory minimum notice that applies to a worker. For an exit before 21 November 2025, the older Acts those codes replaced still govern.

Disputes about F&F are rarely disputes about arithmetic. They are disputes about which heads are payable at all — whether the qualifying service for gratuity was met, whether the exit was a resignation or a constructive dismissal, whether a recovery the employer has deducted was one it was entitled to make. Getting the arithmetic on paper first is what makes the real disagreement visible.

Gratuity: the 15/26 formula

Section 53 of the Code on Social Security 2020 entitles a monthly-rated employee to fifteen days' wages for every completed year of service. Because a monthly-rated employee is treated as working twenty-six days a month, the fifteen days is expressed as 15/26 of the last drawn monthly wages, multiplied by the years of service. A part year beyond six months counts as a full year. “Wages” now follows the Code's definition: basic pay, dearness allowance and retaining allowance, with the excluded allowances (house rent, conveyance and the like) added back to the extent they exceed half of total pay. The figure is therefore never less than half of what you are paid, though it is still not CTC. The qualifying period is five years of continuous service, waived where the exit is on death or disablement; a fixed-term employee qualifies for pro rata gratuity after one year. The ceiling is ₹20,00,000.

Section 56(3) requires payment within thirty days of gratuity becoming payable. Where the employer misses that window, Section 56(4) provides for simple interest on the delayed amount, at a rate not above the one the Central Government notifies for long-term deposits. Forfeiture is available only on the narrow grounds in Section 53(6) — damage or loss caused by the employee, riotous or disorderly conduct or violence, or an offence involving moral turpitude committed in the course of employment — and only after notice and an opportunity to be heard. A blanket refusal to release gratuity pending “clearance” is not one of those grounds. The route when it is not paid is set out in the gratuity claim guide.

Retrenchment compensation under Section 70

Where the exit is a retrenchment and the employee is a worker within Section 2(zr) of the Industrial Relations Code 2020 with one year of continuous service as defined in Section 66, Section 70 makes three things conditions precedent to a valid retrenchment: one month's notice in writing stating the reasons, or wages in lieu; compensation equivalent to fifteen days' average pay for every completed year of continuous service or part of it beyond six months; and notice to the appropriate Government. A retrenchment carried out without them is not merely underpaid — it is open to challenge as invalid. Section 83 adds a further fifteen days' wages, which the employer pays into the worker re-skilling fund and the fund credits to the worker within forty-five days. Whether you are a worker at all is the first question, and the Am I a worker? check walks through it.

Statutory bonus and its two different ceilings

The bonus provisions of the Code on Wages 2019 keep the two ceilings of the old Payment of Bonus Act 1965, and they are frequently confused. The eligibility ceiling decides who is covered: an employee drawing wages above ₹21,000 a month is outside the bonus provisions altogether. The calculation ceiling decides the figure on which bonus is worked out: where actual wages exceed it, bonus is computed as if wages were ₹7,000 a month or the minimum wage, whichever is higher. Both figures were notified under Section 26 on 25 August 2026, with effect from 21 November 2025. The minimum bonus is 8.33 per cent and the maximum 20 per cent, and the employee must have worked at least thirty days in the accounting year. Bonus for the year in which an employee leaves is payable pro rata for the months worked, within eight months of the close of the accounting year (Section 39).

Which rules apply: the date of your exit

The Code on Wages 2019, the Industrial Relations Code 2020, the Code on Social Security 2020 and the Occupational Safety, Health and Working Conditions Code 2020 came into force on 21 November 2025. For an exit on or after that date the calculator applies the codes; for an earlier exit it applies the Payment of Gratuity Act 1972, the Payment of Bonus Act 1965 and the Industrial Disputes Act 1947, which still govern it. The largest practical difference is the wage base: under the codes, allowances above half of total pay are added back into wages, which raises gratuity on allowance-heavy salaries (see the 50 per cent wage rule). Wages are also due within two working days of the exit for every employee, not only for those under the old wage ceiling. States are still notifying their own rules under the codes, which affects procedure and forms more than these formulas.

Frequently asked questions

How long can an employer take to pay F&F?

There is no single answer, because the heads have different sources. Wages, including salary for days worked, are due within two working days of the exit under Section 17(2) of the Code on Wages 2019, for every employee. Gratuity is due within thirty days under Section 56(3) of the Code on Social Security 2020, with interest thereafter. Most employment contracts specify their own F&F period, commonly thirty to forty-five days, but a contract cannot push back a statutory limit. A delay past those limits, with no reason offered, is the point at which a written demand becomes worth sending; the two-day rule is explained separately.

Can the employer hold back my settlement until I complete exit formalities?

It can adjust quantified, admitted recoveries — a salary advance, an unreturned laptop, a notice shortfall the contract permits it to recover. It cannot withhold the whole settlement indefinitely as leverage, and it cannot make the release of gratuity conditional on signing a general release. If a clearance formality is genuinely outstanding, the answer is to complete it in writing and put the employer to terms on the balance.

Am I entitled to gratuity if I worked four years and seven months?

On the plain text of Section 53(1) of the Code on Social Security 2020, no — the qualifying period is five years of continuous service, and the rounding rule in Section 53(2) applies to the computation of years once eligibility is established, not to eligibility itself. Some High Courts, reading the same rule in the old Act, have treated the fifth year as complete where 240 days of it were worked. It is a live point rather than a settled one, and it turns on which High Court's view governs. Worth raising in a notice; not worth assuming. A fixed-term employee is different: the Code allows pro rata gratuity after one year.

Is notice pay recoverable from my F&F if I leave early?

Where the contract provides for pay in lieu of notice, an employer can ordinarily adjust the shortfall against dues. What it cannot do is treat the notice clause as a bar on leaving, or recover an amount larger than the clause provides. Where the clause is one-sided — a long notice period on the employee and none on the employer — its enforceability is arguable.

What forum do I go to if the F&F is simply not paid?

For gratuity, an application to the competent authority under Section 56 of the Code on Social Security 2020. For unpaid wages, a claim before the authority under Section 45 of the Code on Wages 2019, which is open to every employee, or a complaint to the Labour Commissioner. For a sum due to a worker, a recovery application under Section 59 of the Industrial Relations Code 2020 (formerly Section 33C(2) of the Industrial Disputes Act), which is a recovery proceeding rather than an adjudication of entitlement. Employees outside the definition of worker — most managerial and supervisory roles above the wage threshold — are otherwise left with a civil suit for recovery, or a summary suit where the claim is on a written contract. Choosing the wrong forum costs months, so the choice is worth taking advice on before filing.