Full and Final Settlement
Definition
The process of settling all dues when an employee leaves — unpaid salary, leave encashment, gratuity and any recoveries — in a single closing calculation. It clears both parties' outstanding obligations.
Related Terms in Payroll
Payroll Tax
Taxes and contributions levied on wages, which may be withheld from employees, borne by employers, or both. They typically fund social-security and related programmes.
Withholding Tax
Tax an employer or payer deducts from a payment and remits to the authorities on the recipient's behalf, so tax is collected as income is earned rather than only at filing.
Payroll Register
A detailed record for each pay run listing every employee's gross pay, deductions and net pay. It is the source document for payroll journal entries and for reconciling payroll to the general ledger.
Overtime Pay
Additional pay for hours worked beyond the normal schedule, often at a premium rate set by law or contract. Correctly tracking and rating overtime is a common payroll compliance point.
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