Under the Code on Wages, wages due on resignation, removal, dismissal or retrenchment must be paid within two working days of the employee leaving. Check how this applies to your establishment and state.
Confirm the dates
- ☐ Resignation or termination letter on file, and the last working day agreed.
- ☐ Notice period served, bought out, or waived in writing.
Amounts to pay
- ☐ Salary up to the last working day.
- ☐ Leave encashment for unused earned leave, as your policy and state law require.
- ☐ Gratuity, if the employee is eligible (usually after five years of continuous service, and sooner for fixed-term employees under the labour codes). The usual formula is 15 days' wages for each completed year: last drawn wages × 15 / 26 × years of service.
- ☐ Bonus, incentives and reimbursements due.
Amounts to recover
- ☐ Notice-period shortfall, if your contract allows it.
- ☐ Loans or salary advances outstanding.
- ☐ Company property not returned, if your policy allows a deduction.
Statutory
- ☐ TDS on the final settlement, and include it in the employee's Form 16.
- ☐ PF and ESIC contributions on the final month's wages.
- ☐ Record the exit date on the EPFO portal so the employee can transfer or withdraw PF.
Documents to give
- ☐ Full and final settlement statement showing every amount paid and recovered.
- ☐ Relieving and experience letter.
- ☐ Final payslip, and Form 16 when it is issued.
Access and assets
- ☐ Collect laptop, ID card and other assets.
- ☐ Remove system access. In Birch, terminate them with Revoke System Access on, which signs them out and blocks sign-in.