Full & Final Settlement Letter
State the final settlement amount payable to (or recoverable from) a departing employee, with a breakdown line and payment date.
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Have this reviewed before you issue it.
This document can affect someone's employment status. It is a neutral drafting aid, not legal advice, and using this template does not by itself guarantee compliance with the labour law or contract terms that apply to you. Have the final wording reviewed by your HR, legal advisor, or compliance team before it is issued.
Variant
Company & signatory
Employee
Full & Final Settlement Letter details
Company name
Date
Full & Final Settlement Letter
This letter sets out the full and final settlement of accounts for [Employee name], following their exit from [Company name] effective [Last working day].
The net settlement amount payable to [Employee name] is ₹[Net settlement amount], to be paid on or before [Payment date].
This settlement is final and closes all financial obligations between [Employee name] and [Company name] arising from the period of employment, except for any statutory dues payable separately by law.
For the issuing organization
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Guide
Full & Final Settlement Letter, explained
Who this is for. For employers, HR teams and anyone authorized to issue documents for their organization. Don’t use it to make a document in the name of an organization you don’t represent, or one that states something untrue, such as a fake experience letter or salary certificate: that is forgery, and it isn’t allowed here.
About the Full & Final Settlement Letter
A full and final settlement letter is the financial record of an employee's exit — it states the net amount payable or recoverable, with a breakdown of what makes up that figure and when the payment will be made.
Issue it once the exit dues calculation is finalized, typically around the same time as the relieving letter — employees commonly expect both the formal release and the settlement figure at the same stage of an exit. Mind the timing: under section 17(2) of the Code on Wages, 2019, in force since 21 November 2025, wages payable to an employee who resigns or is removed, dismissed or retrenched are due within two working days, unless the appropriate Government has set a different limit.
Fields this generator asks for
Every field below feeds directly into the letter — nothing is invented on your behalf.
- Last working day (required)
- Net settlement amount in ₹ (required)
- Payment date (required)
- Breakdown (optional) (optional)
Variants
This generator supports 2 variants:
- Payable to employee — A net amount owed to the employee.
- Recoverable from employee — A net amount owed back to the company.
Sample content
This letter sets out the full and final settlement of accounts for Kavya Rao, following their exit from Northstar Digital Solutions Pvt. Ltd. effective 31 March 2026.
The net settlement amount payable to Kavya Rao is ₹42500, to be paid on or before 15 April 2026.
This amount is calculated as follows: pending salary ₹35,000 + earned leave encashment ₹9,500 minus advance recovery ₹2,000.
Frequently asked questions
Does this generator calculate the settlement amount for me?
No — enter the net amount your payroll process has already calculated. This letter states and dates that figure; it doesn't compute leave encashment, gratuity, or tax withholding on your behalf.
What if the company owes the employee nothing, or the employee owes the company money?
Use the "Recoverable from employee" variant when the net figure runs the other way — the letter's wording adjusts to say the amount is owed back to the company rather than payable to the employee.
Is this a substitute for a proper payroll settlement statement?
No. This is a plain-language cover letter for the settlement figure, not a payroll or tax document, and it doesn't guarantee your calculation is correct or compliant. Have the underlying figures verified by payroll and, where relevant, reviewed by your finance or legal team before this is issued.
When does the final settlement have to be paid?
For wages, section 17(2) of the Code on Wages, 2019, in force since 21 November 2025, requires the wages payable to an employee who has resigned, or has been removed, dismissed or retrenched, to be paid within two working days, unless the appropriate Government has set a different limit. Some exit payments, such as gratuity, follow their own rules and timelines. Confirm with payroll or a legal advisor how the period is counted in your case, and enter the payment date they confirm; the letter states that date but does not check it.
Related HR tools
No Dues Certificate
Open the No Dues Certificate generator.
Relieving Letter
Open the Relieving Letter generator.
Salary Certificate
Open the Salary Certificate generator.
This document can affect someone's employment status. It is a neutral drafting aid, not legal advice, and using this generator does not by itself guarantee compliance with the labour law or contract terms that apply to your organization. Have the final wording reviewed by your HR, legal advisor, or compliance team before it is issued.