Pay within 2 working days
Full and Final Settlement Calculator: F&F Amount Under the Labour Codes 2026: This free full and final settlement calculator works out what you get when you resign, retire, are terminated or your fixed-term contract ends. It covers:
- salary for the days worked in the last month;
- leave encashment, gratuity and pro-rata statutory bonus;
- notice pay recovery or payout;
- PF, ESI, professional tax, TDS and other recoveries;
- the tax-free and taxable parts of gratuity and leave encashment.
It uses the labour-code wage rule (Basic + DA, at least 50% of gross) and shows when each amount is due.
Full and Final Settlement Formula
Example (calculator default): resignation after 7 years 4 months, last working day 20 October 2026, gross ₹60,000, Basic + DA ₹30,000, 18 days of earned leave, 10 days of notice short.
| Item | Working | Amount |
|---|---|---|
| Salary for 20 days of October | 60,000 ÷ 31 × 20 | ₹38,710 |
| Leave encashment | 30,000 ÷ 30 × 18 | ₹18,000 |
| Gratuity | 30,000 ÷ 26 × 15 × 7 | ₹1,21,154 |
| Reimbursements | As claimed | ₹2,500 |
| Total payable | ₹1,80,364 | |
| Notice shortfall | 60,000 ÷ 30 × 10 | −₹20,000 |
| PF on October salary | 12% × (30,000 × 20 ÷ 31) | −₹2,323 |
| Professional tax | As per State | −₹200 |
| Net F&F payable | ₹1,57,841 |
Gratuity counts 7 years because the extra 4 months is not more than six months. The whole gratuity and leave encashment are tax-free here.
F&F Components and the Rule Behind Each
| Component | How it is worked out | Law |
|---|---|---|
| Salary for days worked | Gross ÷ calendar days (or 30 or 26) × days paid | Code on Wages, 2019 |
| Leave encashment | Wages ÷ 30 (or 26) × unused earned leave | OSH Code, 2020, Section 32; company policy |
| Gratuity | Wages ÷ 26 × 15 × years of service, up to ₹20 lakh | Code on Social Security, 2020, Section 53 |
| Statutory bonus | Bonus base × 8⅓% to 20%, pro rata for the year, if wages are ₹21,000 a month or less | Code on Wages, 2019 |
| Notice pay | Salary for the unserved notice days, recovered from you or paid to you | Appointment letter |
| PF, ESI, PT, TDS | On the last month's salary; TDS on the whole settlement | EPF Scheme, ESI, State PT law, Income-tax Act, 2025 |
When Full and Final Settlement Must Be Paid
- Wages and leave encashment: within 2 working days of the last working day when an employee resigns, is removed, dismissed or retrenched, or the establishment closes (Section 17(2), Code on Wages, 2019). Unused leave must also be paid within 2 working days under the OSH Code.
- Gratuity: within 30 days of becoming payable, with interest if delayed. Apply in Form IV; the employer replies in Form V within 15 days (Code on Social Security (Central) Rules, 2026).
- Statutory bonus: many employers pay the pro-rata bonus with the settlement; otherwise it is paid with the annual bonus, by 30 November for an April–March year.
- Records: keep the itemised F&F statement, final payslip and relieving letter. Form 16 (Form 130 from tax year 2026-27) is issued for the part year.
Many companies still take 30 to 45 days to close F&F. That is company practice; the legal timeline for wages is 2 working days. Read full and final settlement in India for the process, documents and how to escalate.
Wages Used: the 50% Rule
Since 21 November 2025, wages under the labour codes are Basic + DA + retaining allowance. If allowances such as HRA, conveyance and special allowance are more than half of total pay, the excess is added back, so wages are never less than 50% of gross.
The calculator uses these wages for gratuity, leave encashment, statutory bonus and PF. Example: gross ₹40,000 with Basic + DA of ₹14,000. Half of gross is ₹20,000, so ₹6,000 is added back and wages are ₹20,000. Gratuity for 6 years then comes to 20,000 ÷ 26 × 15 × 6 = ₹69,231, against ₹48,462 on Basic + DA alone. Leave a Basic + DA field blank and the calculator uses 50% of gross.
Gratuity in Full and Final Settlement
| Reason for leaving | Minimum service for gratuity |
|---|---|
| Resignation, termination, retirement | 5 years of continuous service |
| End of a fixed-term contract | 1 year |
| Death or disablement | None |
A part year of more than six months counts as a full year, so 7 years 7 months counts as 8. Statutory gratuity is capped at ₹20 lakh. Gratuity can be forfeited only for the misconduct listed in the Code on Social Security; it is not a fund for recovering notice pay. For the 240-day rule and fifth-year cases, see the gratuity calculator.
Notice Period Recovery and Notice Pay
- You resign and serve less notice: the shortfall days are recovered at gross ÷ 30 (or Basic + DA ÷ 30, if your contract says so) per day. On ₹60,000 gross, 10 days cost ₹20,000.
- Your employer ends your job without full notice: the employer pays you salary for the notice days not given. The calculator adds it as notice pay.
- Notice waived: enter the days required and the same number as served, and get the waiver in writing.
Recoveries are contractual. Section 18(3) of the Code on Wages limits total deductions from wages in a wage period to 50%, and the calculator warns when recoveries cross half of the salary and leave encashment.
Leave Encashment and Bonus on Exit
Leave encashment: under Section 32 of the OSH Code, a worker earns 1 day of annual leave for every 20 days worked once 180 days are worked in a calendar year, and unused leave is paid on leaving. Casual and sick leave usually lapse under company policy. The calculator divides wages by 30 (or 26 if you choose the 26-day basis). See the leave encashment calculator.
Statutory bonus: applies when wages are ₹21,000 a month or less and you worked at least 30 days in the year. The base is wages capped at ₹7,000 or the minimum wage, whichever is higher, at 8⅓% to 20%, in proportion to the days worked in the April–March year. Enter 0 if your employer pays bonus separately. See the bonus calculator.
Is Full and Final Settlement Taxable?
| Part of F&F | Tax for private-sector employees |
|---|---|
| Salary, bonus, notice pay, incentives | Fully taxable as salary |
| Gratuity | Tax-free up to ₹20 lakh in your lifetime |
| Leave encashment on resignation or retirement | Tax-free up to the least of: amount received, 10 months' average salary, leave credit at 30 days per completed year, and ₹25 lakh in your lifetime |
| Gratuity and leave encashment paid to legal heirs on death | Not taxed as salary |
From tax year 2026-27 these exemptions are in Section 19 of the Income-tax Act, 2025 (earlier Sections 10(10) and 10(10AA)), and they apply in both the old and new tax regimes. Government employees' gratuity and leave encashment on retirement are fully exempt. The calculator assumes no exemption was used with an earlier employer. Check TDS with the TDS on salary calculator.
How to Use This F&F Calculator
- Choose the reason for leaving and enter your date of joining and last working day.
- Enter monthly gross salary and Basic + DA from your payslip (leave Basic + DA blank to use 50% of gross).
- Enter LOP days in the last month, if any, and pick the per-day basis your company uses.
- Enter earned leave balance and, if you are covered, the statutory bonus %.
- Enter notice required and served, and choose whether notice pay is on gross or Basic + DA.
- Add reimbursements, advances, professional tax and TDS, and choose how PF is deducted.
- Read the net F&F, the tax split and the due dates. Use Copy to send the working to HR.
For the final payslip, use the salary slip generator. For PF on the last month, see the PF calculator.
Frequently Asked Questions
How is full and final settlement calculated?
Add salary for the days worked, leave encashment, gratuity, bonus and other dues, then subtract notice shortfall, PF, ESI, professional tax, TDS and advances. The result is the net F&F amount.
What is the time limit for full and final settlement in India?
Wages, including unused leave, must be paid within 2 working days of the last working day under Section 17(2) of the Code on Wages, 2019. Gratuity must be paid within 30 days of becoming payable.
Is gratuity part of full and final settlement?
Yes, if you are eligible: 5 years of continuous service, 1 year for a fixed-term contract, or any service on death or disablement. It is wages ÷ 26 × 15 × years of service, up to ₹20 lakh.
How is leave encashment calculated in F&F?
Wages (Basic + DA, at least 50% of gross) ÷ 30 × unused earned leave days, or ÷ 26 if your company uses a 26-day basis. 18 days on ₹30,000 wages is ₹18,000.
How is notice period recovery calculated?
Monthly gross (or Basic + DA, as your contract says) ÷ 30 × the notice days not served. 10 days on ₹60,000 gross is ₹20,000.
Can my employer adjust notice pay against gratuity?
Gratuity can be forfeited only for the misconduct listed in the Code on Social Security, such as causing damage or loss, which limits forfeiture to that loss. A notice shortfall is a contractual recovery, so ask for an itemised statement if gratuity is reduced.
Is full and final settlement amount taxable?
Salary, bonus and notice pay are taxable. Gratuity is tax-free up to ₹20 lakh and leave encashment up to ₹25 lakh (lifetime limits) under Section 19 of the Income-tax Act, 2025, in both tax regimes.
Is PF deducted in full and final settlement?
PF is deducted on the wages in the last month's salary, at 12%. It is not deducted on leave encashment or gratuity. Your PF balance is separate and can be transferred to the new employer using your UAN.
Do I get bonus in full and final settlement?
Statutory bonus is due if your wages are ₹21,000 a month or less and you worked at least 30 days in the year, in proportion to the days worked. Performance bonus depends on the company's scheme.
What if my F&F is delayed or wrong?
Ask HR in writing for an itemised statement, citing Section 17(2) of the Code on Wages. If unpaid, approach the Labour Commissioner for wages and the Controlling Authority for gratuity, with your payslips and relieving letter.