Settle an employee

Settlement pays out and closes an employee’s PF, usually when they leave. Any outstanding loan is recovered automatically.

Before you start

Publish the employee’s final Payroll before the Settlement date. Payroll published later still adds to their PF, so a settled employee would show a balance again.

Steps

1. Open Settlement

   On the PF Transaction page, click Settlement.

2. Calculate

   Choose the Employee and Post Date, then click Calculate Settlement.

3. Review the breakdown

   Check contributions, profit, additions, deductions, withdrawals, any earlier settlement, the outstanding loan, and the net payout.

4. Choose where to pay from and save

   Select the Payout Account (bank or cash; shown only when there is a Net Payout) and Project, then click Save or Save & Post.

Example

Sara leavesSettlement 15-Sep-2025

Employee Contribution	120,000.00
Employer Contribution	120,000.00
Profit Allocation	30,000.00
Other Addition	0.00
Less: Other Deduction	0.00
Less: Permanent Withdrawal	(20,000.00)
Gross PF Balance	250,000.00
Loan Given	60,000.00
Less: Loan Repayment	(35,000.00)
Less: Outstanding Loan	(25,000.00)
Net Payout	225,000.00

Her 25,000 outstanding loan is recovered first. Sara is paid the 225,000 Net Payout from the Payout Account you choose, and her PF balance and loan both become zero.

The Settlement’s voucher clears the PF account by the Gross PF Balance, the loan account by the Outstanding Loan, and pays the Net Payout from the Payout Account. Open it with View Voucher on the Settlement.

Unusual cases

• Earlier settlement. If the employee was settled before, the amount already paid appears as Less: Previous Settlement, so the breakdown still adds up to the Gross PF Balance.
• Negative loan. If repayments were more than the loans given, the Outstanding Loan is negative and increases the Net Payout.
• Negative Net Payout. If the loan is larger than the Gross PF Balance, the Net Payout is negative: the employee owes the company, and the Payout Account receives the amount.
• Nothing to settle. A Settlement is blocked only when the Gross PF Balance and the Outstanding Loan are both zero.

Good to know

• If balances change after you calculate or save, saving or posting shows Recalculation required. Open the Settlement with Edit, click Recalculate, and save again.
• A saved Settlement keeps the breakdown it was saved with.