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How do I compute the Final Settlement of an employee?#

Greytip Online provides comprehensive Final Settlement calculation tools. You can calculate Settlements for employees before or after resigning them.

One way of calculating settlements is before marking the employee as resigned. This is normally adopted when an employee has resigned in the current month and you are doing his settlement in the same month. In this method you will not resign the employee. You will complete his settlement and make his payout by cheque. You will then process the regular payroll and lock it. This ensures that all employees, including settled employees appear in all Statutory Reports. You will resign the employee after opening the next Payroll.

In the other method, you will mark an employee as resigned as soon as he leaves the organization. His settlement gets done either in the current month or in any other subsequent months. This employee will not appear in any reports except the Settlement report (of the month when his settlement process is run). While generating the Statutory reports, you will need to explicitly select the Include Left Employees check box to ensure that these employees are part of the report.

To process the settlement of the employee:

1. Reach the Salary Information screen by clicking on the Salary Information menu item under the Employee menu.
2. Click on the Final Settlement tab to reach the Final Settlement screen.
3. You can see the list of employees who have resigned and not yet settled (see box 1).
4. If you intend to process the settlement for one of these employees, select them from the dropdown (see box 2)
5. If you have an employee who is not yet resigned, then you will need to select the employee from the Entry screen and come to the Settlement screen. You can then process the settlement for this (non-resigned) employee.
6. Check-on the Settle Employee check box to mark the employee as settled (see box 3).
7. Update the Submission Date, Leaving Date and Settlement Date.
8. The _Settlement Date should be a date within the current Payroll month.
9. The Notice Period and Notice Period payable will be calculated if this data is entered in the Resignation Details screen.
10. The number of days for which the salary will be calculated is displayed in the No. of Days Worked field (see box 4).
11. In case you need to pay for multiple months, click on the Days button and enter the month and number of days that you will pay in that month (see box 5).
12. Once you have updated the data here, click on the Save button to save the information (see box 6).
13. Next, click on the Entry tab. The employee, whose settlement is being processed will be selected and his information will be displayed.
14. Click on the Process button to process the settlement for the employee.
15. During the process of settlement payroll processing, the following happens:
    • The salary is calculated for the number of days specified in the No. of Days Worked field (see box 4)
    • Any outstanding loans for the employee are completely recovered.
    • Complete Income Tax is calculated and outstanding tax liability is deducted.
    • Any reimbursement balance is calculated on a prorata basis and paid or recovered as a taxable component.
16. Once the processing is completed, you need to come back to the Settlement screen by clicking on the Final Settlement tab.
17. Click on the Lock button to lock the calculations and ensure that there are no further changes (see box 7)
18. You can print the Settlement report by clicking on the Print Settlement report (See box 8).

See Also#