When someone leaves, a settlement collects everything owed in both directions into one figure. You need payroll access.
What It Adds Up
| Component | What it is |
|---|---|
| Years of service | Calculated from joining to termination date |
| Gratuity | End-of-service benefit, where the hub's profile enables it |
| Leave encashment | Unused days for leave types marked encashable |
| Pending commission | Earned but not yet paid |
| Total payable | The sum, net of anything outstanding |
An unrepaid salary advance offsets against it - which is the practical reason a settlement should be prepared before the last payroll run rather than after.
Gratuity
Calculated from the hub's payroll profile: days per year, vesting years, and the salary basis. Someone below the vesting threshold may have no entitlement; the settlement reflects the rule rather than a judgement.
Caution
Gratuity accrues invisibly for years and is only ever seen at exit. If the basis was configured wrongly at setup, the error is years old by the time anyone notices, and you are discussing it with someone who has just left. Check the gratuity configuration when you set up a hub, not when the first person resigns. See Payroll Profiles and Deductions.
Leave Encashment
Only leave types marked encashable are paid out. Which types those are is a configuration decision made long before anyone leaves. See Leave Types and Allowances.
The Order To Do It In
- Confirm the termination date. Years of service and every accrual depend on it.
- Close out attendance and leave to that date, so the balances are final.
- Settle commission - anything earned but unpaid.
- Produce the settlement and check each component against its rule.
- Offset any outstanding advance.
- Get it approved and paid, then archive the employee record.
Doing this before the final payroll run avoids paying a normal month's salary to someone who should have been settled.
Common Questions
Someone left mid-month. They should be settled, not paid a full month. Check the run's headcount before approving - see Running Payroll.
They owe more than they are owed. The total payable can be negative in principle. Recovering it is a legal question in most jurisdictions, so take advice rather than assuming.
Is a settlement a payslip? No. It is its own record, with its own components and approval.
Can it be produced before the last day? It can be drafted, but figures are only final once attendance and leave are closed to the termination date.
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