Why is Full & Final Settlement (FNF) payment delayed?

After submitting a resignation, the most common question every employee asks is: When will I receive my FNF payment?

Employees often inform HR during resignation, requesting them to process the FNF quickly due to EMIs or other personal reasons. However, many employees receive their FNF payment 2–3 months later, which forces them to wait for a long time.

In today’s topic, we will cover:

• What is FNF?
• Why is FNF delayed?
• Company rules vs. employee rights

What is Full & Final Settlement (FNF)?

When an employee separates from a company—whether due to resignation, retirement, or death—the employer clears all outstanding dues. This includes calculating salary up to the last working day, releasing any held salary, and paying other components such as Gratuity and Leave Encashment. If there are any recoveries, those are also adjusted as part of the FNF process.

• All employee dues are cleared
• Final payment is released after the last working day

What components are included in FNF?

The FNF amount is not just the last month’s salary. It includes multiple components, explained below:

1. Salary till Last Working Day
   Salary is calculated up to the employee’s last working day in the respective month. If the previous month’s salary was on hold, it is also paid.
2. Leave Encashment
   Any remaining Earned Leave or Privilege Leave (PL) is calculated and paid along with FNF, if you want to know more about the leave encashment please read by Leave Encashment post.
3. Bonus / Incentives
   Any payable performance bonus or incentive is paid. If the employee is eligible under the Statutory Bonus Act, statutory bonus is also paid.
4. Gratuity
   If the employee is a full-time employee and has completed 5 years of service, gratuity is paid. In some cases, fixed-term or contractual employees are also eligible after completing one year, as per applicable rules new code of Wages on Gratuity
5. Deductions / Recovery
   Recoveries include outstanding office loans, damage to company assets, or notice period shortfall recovery if the employee has not served the full notice periods.

Why is FNF payment delayed?

There can be several reasons for delay in FNF processing. Some of the most common reasons are:

1. Manager / Department approval pending

If the reporting manager has not provided clearance, HR cannot complete the clearance formalities, leading to delays.
Improper handover of responsibilities can also result in FNF being put on hold.

2. Asset clearance delay

If any company asset is damaged, time is required to decide whether the amount will be recovered from the employee or waived by the company.
Similarly, delays from the admin department can impact salary clearance.

3. Leave balance verification

In some cases, confusion regarding the correct leave balance leads to delays in FNF calculation.

4. Payroll cycle dependency

Every company follows a standard payroll cycle. If the FNF input is received within a specific cutoff date, it is processed in the same month; otherwise, it is pushed to the next payroll cycle.

5. Recovery calculation

Certain recoveries—such as notice period adjustment or salary adjustments—require multiple approvals, which may take time.

Within how many days should FNF be paid?

HR usually communicates an expected timeline such as 30–45 days, and in some companies, it may go up to 60 days.
As a standard practice, FNF should ideally be processed within 30 days.

As per the new Code on Wages, FNF is expected to be cleared within 48 hours, as stated in the provisions (subject to implementation).

What should an employee do if FNF is delayed?

If your FNF payment is delayed:

1. Send a polite follow-up email to HR/Payroll asking for the expected FNF release date.
2. Keep your reporting manager in CC while sending the email.
3. Regularly follow up with your manager for updates.

FAQ

Q1. How many days can a company delay FNF payment?
As per standard practice, FNF should be paid within 30 days. Under the new Code on Wages, it is expected within 48 hours (once fully implemented).

Q2. Is FNF mandatory after resignation?
Yes, FNF settlement is mandatory for all employees after separation.

Q3. Can HR legally hold FNF salary?
Only in cases of pending clearance, asset recovery, or notice period recovery.

Q4. What if the company does not release FNF?
Employees can send written reminders, escalate internally, or approach the Labour Department if required.