Payroll · Setup & configuration · 7 min read

Settlement policies

Define how a leaver's final pay is built for each termination reason, and get the policy approved.

Before you begin

• The rule package that prices the components is approved.
• You hold payroll.configure; another person holds payroll.rules_approve. The author cannot approve: 'A settlement policy is approved by somebody other than its author.'
• The Final settlements feature is on.

Steps

Create the policy

1. Go to Payroll > Configuration > Settlement policies and click New policy.
2. Enter Code, Name, Rule package code and Legal source reference. A code that already exists becomes the next version.
3. Enter Effective from; Effective to is optional.
4. Tick the Termination categories it covers: Resignation, Dismissal, Mutual agreement, End of contract, Probation not confirmed, Redundancy, Retirement, Death in service, Absconding, Transfer out, Other. At least one is required.
5. If the company's field rule requires it, enter the Arabic name.

Set recoveries and corrections

1. Enter Recovery cap percent, the share of the settlement that recoveries may take. Empty means no cap.
2. Set Recovery priority: Loan, Advance, Expense claim, Travel advance, Asset, each once.
3. Enter Correction period (days after posting); 0 means no limit.
4. Tick Always require specialist review if every settlement needs sign-off.

Add components

1. Click Add component.
2. Enter the Component key: standard keys are unpaid_salary, leave_encashment, end_of_service and notice_pay.
3. Enter the Pay element code. Every component except unpaid_salary needs one.
4. Choose Quantity from: One unit, Leave days, Service days, Completed months, or Completed years.
5. Enter Base elements (for example BASIC), Leave types and Min. service days. Below the minimum, the component pays nothing.
6. Save.

Approve

1. A different person with payroll.rules_approve clicks Approve policy. It is then frozen. Use New version to change it.

What happens next

• When a settlement is calculated, the policy is chosen by the termination reason on the last day. If none covers it, a blocking finding says 'No approved settlement policy covers this termination reason on the last day.'
• A newer approved version of the same code ends the older one automatically.
• A component the package has no rule for appears as Not configured - specialist rule required, not as a guessed amount.

Good to know

• Two approved policies cannot cover the same category over the same dates: 'Policy X v1 already covers resignation over these dates. Two policies for one category cannot overlap.'
• 'Choose at least one termination category.' and 'Name the rule package family that prices its components.' are approval checks.
• A recovery cap above 100 is refused: 'A share cannot exceed 100.'
• 'Component end_of_service needs a pay element code.' when the element is missing.
• The UAE gratuity reading (quantity source ae_gratuity_days) is accepted by the system but is not in the screen's list. Ask your implementation team to set it.
• Turning the Final settlements feature off refuses changes but the menus remain.