Final Settlement Letter Template

A final settlement letter is a formal document given to an employee when they leave a company, whether through resignation, termination, or retirement. It confirms that all dues have been settled and provides a clear breakdown of payments and deductions made under the Full and Final (F&F) Settlement.

This letter is often one of the last official documents an employee receives from their employer and becomes an important record for both personal and financial purposes.

A final settlement letter is important because it closes the employment relationship in financial and administrative terms. By listing out payments, encashments, and deductions, it ensures transparency and prevents misunderstandings.

It also protects both sides: employees have proof that their dues were cleared, and employers have confirmation that no pending claims remain. In many cases, this letter is also requested by new employers as part of background verification.

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).