Full and Final Settlement Policy Template

Full and Final Settlement Policy

Purpose of Full and Final Settlement Policy

This Full and Final Settlement Policy sets out the standard process and controls for concluding all financial and administrative obligations between [Company Name] and an employee when employment ends. The policy exists to ensure accurate, consistent and timely settlement of final pay, benefits and recoverable amounts while protecting company assets and meeting internal compliance requirements.

Scope

This policy applies to all employees of [Company Name], including permanent, temporary and contract staff, across all locations and business units. It covers final pay calculation, leave encashment, deductions, clearance procedures and issue of final documentation.

Final Settlement Components

Final settlement may include, where applicable:

• Outstanding salary and prorated payments up to the last working day
• Accrued but unused leave encashment in accordance with company policy
• Overtime, commissions or bonuses that are due and approved
• Reimbursements for approved business expenses pending verification
• Deductions for unreturned company property, outstanding loans or advances, and unserved notice period where applicable
• Adjustments for benefit terminations and any post-employment obligations

Settlement Timing and Process

Final settlement will be initiated after the employee’s last working day and completion of required clearance activities. The payroll and finance teams will process payment once HR confirms clearance and approvals. Typical processing aims to complete settlement within a reasonable period after clearance, subject to submission of required documentation and approvals.

Documentation and Clearance Requirements

Before final settlement is processed, employees must complete the required exit and clearance steps. Required items commonly include:

• Completed resignation or termination acknowledgement
• Exit interview form, if applicable
• Return of company property such as ID cards, laptops, mobile devices, keys, access cards and documents
• Manager and department clearance confirming handover of duties
• Submission of outstanding expense claims and supporting receipts

Deductions and Adjustments

[Company Name] will apply deductions to the final settlement for approved reasons such as unreturned property, outstanding loans or advances, overpayments, or failure to serve notice where applicable. All deductions will be itemized and explained on the final payslip or settlement statement.

Payment Method and Records

Final settlement payments will be made using the employee’s standard payroll payment method unless an alternative is agreed in writing. A final payslip and settlement statement will be provided setting out all components, deductions and net payment. Payroll records will be retained in accordance with company record retention practices.

Approval Process

Requests for final settlement and any exceptions follow the approval workflow below. Exceptions must be documented and authorized prior to payment.

• Line manager initiates and verifies the employee’s clearance, confirms handover and submits clearance form to HR
• HR verifies personnel records, confirms benefit termination dates and validates required forms
• Finance or payroll verifies pay calculations, outstanding reimbursements or deductions and prepares the settlement payment
• Senior HR or finance approval is required for any settlement exceptions, manual adjustments or disputed amounts

Role of Managers and HR

Managers are responsible for ensuring work is handed over, completing the departmental clearance and confirming any business-related deductions or recoveries. HR is responsible for coordinating the exit process, validating entitlements and confirming clearance to finance. Finance is responsible for calculating and executing the final payment once approvals are in place.

Exceptions and Dispute Resolution

If an employee disputes any component of the final settlement, they should raise the issue with HR promptly. Disputes will be reviewed by HR and finance, with managers consulted as needed. Approved adjustments resulting from dispute resolution will be processed under the standard approval workflow.

Non-Compliance

Failure to comply with this policy, including not returning company property or withholding required documentation, may delay final settlement and could result in deductions, withholding of clearance documents such as relieving letters, or other actions consistent with company policies. Persistent or serious non-compliance may lead to further disciplinary or recovery actions as appropriate.

Note

This policy may be updated periodically to reflect business needs and operational changes. Employees should refer to the latest version maintained by HR. For clarification on any aspect of the Full and Final Settlement Policy, employees should contact HR.