# How do I process Leave Encashment/Recovery, Notice Period Recovery and Gratuity while calculating an employee's FNF in payroll?

- Leave Encashment/Recovery: If you are using the Leave module and provide your employees with the option to encash their available leave balance at the time of separation, this feature will calculate the amount.
- Firstly, go to Leave >> Settings >> Leave Categories and edit the general leave that is eligible for leave encashment.
- Toggle the question "Is this category eligible for leave encashment/recovery during FNF?" to Yes
- Next, go to Templates and edit the templates which include this leave category.
- In step 2 under "Enter maximum encashable days for FNF (leave blank for no limit)" specify the number of leaves that can be encashed.
- Now go to Payroll >> Payroll Settings >> General Settings
- Under "How would you like to calculate Leave Encashment?" choose the components on which you want to calculate leave encashment to the employee.
- Under "What is the denominator for calculating the Encashment?" choose between 30 days and 26 days
- Under "How would you like to calculate Leave Recovery?" choose the components on which you want to calculate leave recovery from the employee.
- Under "What is the denominator for calculating the Recovery?" choose between 30 days and 26 days
- You are now ready to calculate Leave Encashment/Recovery in payroll
- Notice Period Recovery:
- Go to Payroll >> Payroll Settings >> General Settings
- Select Yes for "Is Notice Period Recovery applicable?"
- Under "How would you like to calculate Notice Period Recovery?" choose the components on which you want to calculate notice period recovery from the employee.
- Under "What is the denominator for calculating the Notice Recovery?" choose between 30 days and 26 days
- You are now ready to calculate Notice Period Recovery in payroll
- Gratuity:
- Go to Payroll >> Payroll Settings >> General Settings
- Select Yes for "Is Company eligible for Gratuity?"
- Enter the gratuity percentage in "Enter Percentage for Gratuity"
- Under "Select Components on which Gratuity is calculated" choose the components on which you want to calculate gratuity from the employee.
- You are now ready to calculate Gratuity in payroll

Here is how these will work in Payroll

- In the payroll process, we have added a new step called Encashment and Recovery
- Here you will find the list of all FNF employees.
__The amounts here will be preset to 0 (ZERO). Admins are required to verify each and every FNF payment made.__- If you wish to use system calculations, click on Take Actions (hammer icon). This will take you to the calculations page for that particular employee
- Under the Leave Encashment / Recovery Calculation, you will see the total amount to be paid. You need to specify the final amount and exemption
- Under Gratuity Calculation, you will see the last working date and the total number of days worked. You can overwrite the gratuity amount paid
- Under Notice Period Recovery Calculation, you will see the notice period to be recovered if any along with its rate. Here too you can overwrite the final amount
- This needs to be done for all FNF employees

Note: While computing leave encashment/recovery we exclude any excess leave accrued first. For example, assume the employee has accrued 12 leaves for the year in January (one leave per month). But the employee's last working day is 31st March. Therefore they are eligible for only 3 leaves. 9 leaves will be taken back by the system automatically. Their leave encashment/recovery will depend on the 3 leaves for that year and rollover balance if present.