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HomeDocumentationEmployee Separation Kit

Documentation

Employee Separation Kit

The four documents every employee exit requires: resignation acceptance letter, full and final settlement statement, relieving letter, and experience certificate. Compliant with Indian labour law and formatted for the employee's next employer.

When an employee exits, four documents are needed: resignation acceptance, full and final settlement, relieving letter, and experience certificate. All four must be consistent with each other and compliant with applicable labour law.

An employee separation involves multiple documents that serve different purposes: the resignation acceptance confirms the company received and accepted the resignation, the full and final settlement calculates every amount owed to and by the employee, the relieving letter confirms the employee is relieved of duties, and the experience certificate states the period and role for the employee's next employer.

These documents are often drafted independently by different people, leading to inconsistencies in dates, designations, or terms that create problems later: for the employee at their next job, and for the company if the separation is disputed.

Scope

What's included

Specifics

The details

Resignation acceptance

The acceptance letter confirms the company has received the resignation, states the last working day (after the notice period or waiver), and notes any pending handover requirements. It should reference the original employment agreement's notice period clause.

Full and final settlement

The FnF statement itemizes every component: salary for days worked in the last month, leave encashment for unused earned leave, bonus (if applicable under the Payment of Bonus Act, 1965), gratuity (if the employee has completed 5 years of continuous service under the Payment of Gratuity Act, 1972, capped at ₹20 lakh), any reimbursements owed, minus recoveries (notice period shortfall, loans, advances, assets not returned). TDS is deducted as applicable.

Relieving letter and experience certificate

The relieving letter is issued on or after the last working day and confirms the employee has been relieved after completing all handover formalities. The experience certificate states the period of employment, designation, and (optionally) a note on conduct and performance. Most employers issue both on the last working day.

Process

How it works

Step 1 of 4

Share the employee details

Name, designation, joining date, last working day, and resignation date.

Share the employee details

Name, designation, joining date, last working day, and resignation date.

Common mistakes founders make

  • Issuing the relieving letter before the employee has completed the handover.
  • Inconsistent dates across the four documents (different last working dates in different letters).
  • Forgetting to include gratuity for employees who have completed 5 years.
  • Not deducting TDS on the FnF settlement where applicable.
  • Delaying the relieving letter, which blocks the employee from joining their next employer.

Clarifications

Frequently asked questions

While there is no single central law mandating it, several state Shops and Establishment Acts require employers to issue a service certificate on separation. In practice, withholding it can lead to labour court complaints.

Under the Payment of Gratuity Act, 1972, gratuity is payable to employees who have completed 5 years of continuous service (4 years and 240 days in some cases). The rate is 15 days wages per year of service, capped at ₹20 lakh.

Yes, if the employment agreement provides for it and the employee has not served the full notice period. The deduction is the salary for the unserved portion of the notice period.

The FnF statement should be transparent and itemized. If the employee disputes it, the matter can be referred to the labour court or the conciliation officer under the Industrial Disputes Act, 1947.

Related

Learn more

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Key terms

Full and Final Settlement
The final financial settlement between employer and employee on separation, covering all amounts owed to and by the employee.
Relieving Letter
A letter from the employer confirming that the employee has been relieved of duties after completing all handover requirements.
Gratuity
A statutory payment under the Payment of Gratuity Act, 1972, payable to employees who have completed 5 years of continuous service, at 15 days wages per year of service.
Notice Period
The period between the date of resignation and the last working day, as specified in the employment agreement.