Full and Final Settlement Process

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Open HRMS Gratuity Settlement module handles employee settlements during the resignation process. The Gratuity is usually paid at the time of retirement, but it can be paid before retirement based on certain conditions. An employee is eligible to receive gratuity only if he has completed a minimum five years of service in the company. The Gratuity can be paid before the completion of five years in certain cases like the death of an employee or become disabled due to accident or diseases.

The Manager can create Gratuity Settlements of Employees during their resignation. The settlement amount is calculated based on a predefined equation. A Gratuity settlement can create only when the Resignation request of the employee is approved. To create settlements other than gratuity the settlement reason should be mentioned.

Gratuity settlement creation

A Gratuity Settlement can create once the 'Resignation Request' of the employee is approved. Select the employee and click ‘Validate’ button to validate the salary details and working period.

Salary Details

The gratuity amount is calculated from the last drawn salary of the employee. The last drawn salary is counted from the recent payslip of the employee. The Net salary in the payslip is calculated as the Last Salary of the employee here. If there is no recent payslip for the employee, the module set a provision to mention the salary in the field. If any additional allowance is to be added, one can mention them in the ‘Dearness Allowance’ field.

Calculation of Gratuity amount.

The gratuity amount is calculated on the basis of a predefined formula. The formula is as follows: (15 * last drawn salary * period of working) divided by 26. Last drawn salary is the last month salary(Basic salary +Dearness allowance) and period of working is the number of years of working. The period of working should be greater than or equal to five to create the Gratuity settlement.

Other Settlement Creation.

To create other settlements, the settlement reason should be mentioned like the death of an employee or employee getting disabled in an accident or out of sickness etc. Citing of proper reason helps in easy initiating of settlements by the company. To create this type of settlements employee should have at least one year of working experience in the company.


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