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Create a Full & Final Settlement
What this document does
The statement an employer issues on separation, itemising what is payable — final salary, notice pay, leave encashment, gratuity, reimbursements — and what is deducted, with the net amount and how it is paid. Signed by both: the employee acknowledges receipt. The optional release closes the claims this settlement covers and expressly leaves statutory entitlements untouched. Issued by the employer. Where the employer has NOT paid and the former employee is demanding salary, dues, or withheld documents, that is the employee's own notice — the Unpaid Salary and Dues Notice.
Letter
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Full & Final Settlement
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What else is in it — 7 clauses, 1 optional
- 01
Who the letter is from and to
The head of the letter: the place and date it bears, the employer it issues from, and the person it is addressed to. Both are parties who sign, so both come from the party picker rather than being typed into the letter.
- 02
Subject
The one line the letter is filed and found by. Written by the employer rather than composed from the particulars — those live on other clauses, and a clause cannot read another clause's data.
- 03
The employment
Who the employee was and when the employment ended. Establishes what the settlement is a settlement of.
- 04
The settlement
What is payable and what is deducted, itemised, with the net the employer states. Nothing here adds up the rows or works out the net — those are the employer's figures, and a person signing a receipt should be checking arithmetic somebody stands behind rather than arithmetic a document performed.
- 05
How and when it is paid
The route and the timing of the payment. Stated rather than computed — a date the employer commits to, not one derived from the last working day.
- 06
Acknowledgement
How the statement closes and what the employee's signature means. It acknowledges receipt of the stated sum and agreement with the statement — not a waiver of anything the law confers, which the release clause says explicitly.
- 07
Acceptance
The other side's own words, accepting what the letter offers. Its own clause in an unnumbered section, because it is not a term of the letter and reading as one — indented under the employer's numbered request — is where it was.
After it is drafted
Paying first, and asking for acknowledgement after
A release obtained by holding back wages the employee has already earned can be attacked afterwards as given under coercion or undue influence, which puts the whole settlement back in play. Paying what is owed and asking for an acknowledgement of receipt stands on much firmer ground than making the payment conditional on signing a wide waiver — and it is the same money either way.
Giving it to the employee, and keeping the file copy
A letter that stays in the HR system has not been issued. The employee needs their copy for the things other people will ask them to prove — a next employer, a bank, a consulate, a provident fund office — and the employer needs an acknowledged copy on file, because the acknowledgement is what answers a later claim that nothing was ever received. Email with the signed PDF attached does both jobs where the employee has a working address.
The period the wage legislation allows
The wage legislation fixes a period within which wages have to be paid when an employee resigns or is removed, and it runs from the separation rather than from this statement. A settlement issued late does not become timely because the employee signed it, so the date the payment actually leaves is the one that matters — not the date on the document.
Gratuity and provident fund, which this does not settle
Both arise under legislation and are claimed through the machinery that legislation provides, so they survive this settlement whatever it says — which is exactly why the release here is confined to the claims the statement actually settles. Each is usually a separate process with its own forms and its own timing, and neither is discharged by this payment going out.