Final Settlement Letter Template

A final settlement letter is a formal document issued to an employee upon separation—whether resignation, termination, or retirement. It confirms that all dues have been cleared and details the payments and deductions made under the Full and Final (F&F) Settlement.

It provides written proof that employment has been closed financially and administratively. It also protects both the employer and employee by recording the exact settlement amount and confirming there are no further obligations.

A standard final settlement letter template usually includes:

• Employee’s name, job title, and department
• Last working day
• Gross salary payable up to last day
• Leave encashment (if applicable)
• Bonus, incentives, or reimbursements (if applicable)
• Deductions (taxes, benefits, notice recovery)
• Net settlement amount payable
• Payment date
• Statement confirming clearance of all dues
• Signature block

Yes. If an employee believes the settlement amount is incorrect, they can request a detailed breakdown from HR and submit supporting documents (such as pending expense claims or leave records). Many companies also allow a formal written appeal within a specified time frame.

Most employers process the final settlement within 30 to 45 days of the last working day, although timelines vary by country and company policy. In some jurisdictions, labor laws require payment within a shorter period (such as 7 to 15 days).