Employee Exit Process | Exit Formalities of an Employee
12 minutes read

Employee Exit Process | Exit Formalities of an Employee

Hello, In this blog, we will discuss all about the exit formalities of an employee, and we will cover the following.

At a point, every employer has the moment of employee offboarding (desired or undesired). Whether the employee has been terminated, retired, or resigned, your responsibility is to handle the employee offboarding process timely, legally, and fair. These kinds of sensitive situations can be complicated in the HR process. In such cases, you need to use an employee offboarding process, which we discuss below.

What Is an Employee Exit Process?

An Employee’s exit process is the process of full and final settlement of an employee when they leave the company/organisation.
When an employee attends the age of retirement/retires, resigns, or is terminated to work, the need to complete some formalities documentation or some paperwork associated with the employee exit, needs to pass through some systematic process. This process may involve clearance from a department, documentation, knowledge transfer, exit interview, recovery of assets, IT permission and access, and other processes.

Exit Formalities of an employee to Include in Your Exit Process

There are many formalities that employees and employers have to follow –

Acknowledge the resignation

If an employee has made up his mind to resign/ leave the company, you try to receive a resignation letter as soon as, formally or informally, and let them know that you received the letter. And further have begun the process. Once you have done this, now you can follow the additional process.

The manager and the HR manager need to communicate and decide if they want to attempt to retain or not.
HR then informs the employee’s team and other necessary departments. Setting things in progress for a smooth transfer of work. Further, the HR department then shares the employee’s exit date with the manager.

2. Notice period and documentation process

Then HR will take the process further and discuss the last day of working for the employee.
Usually, notice periods are already decided or mentioned in the appointment letter when an employee joins. This has to be adhered to unless the employer and employee mutually decide. But in some cases, the employee refuses the notice period. And it’s a good thing to be prepared for that.
The next important step in the process is the documentation of the employee. Documenting the employee’s offer letter, details, leaving letter, and benefits. Ensure that all the documents are in order. If they aren’t, then try to do it first before going further.

Some of the documents you should keep in mind before leaving the employee-

The employee’s final paycheck is prepared, which includes the document.
Experience letter and employees’ testimonials.
Employee’s dues salary
Employee benefits that will continue in future
Non-Disclosure Agreement along with all applicable forms for the company’s security.
Employee acknowledgment/signed resignation or termination letter.
The employee’s confirmation of receiving the Experience letter.

3. Relieving formalities

Knowledge transfer

Before the employee leaves, if any other new recruit employee has taken that position, then the resigning employee has to share their knowledge with the new employee. And the employer has to conduct a meeting between the two employees. The leaving employee will share their expertise with the new hire and show them some critical aspects of the role.

The process of job handover

This process can’t be completed in a day. So, HR will help the exiting employee make a thorough job handover document and also help the new employee to take over the new role and responsibilities. And, make sure that the leaving employee documents the tasks and divides them into heading and subheadings. Because it will help the new employee to follow the task easily.
Further, mention the underway tasks with the priority tasks. This will give the employee an idea about where they should start. Such as contacts of clients, supporting employees, vendors, mail ID, important documents, and general- protocol, daily, quarterly, weekly, monthly duties, and process flows.

Recovery of company assets

HR’s responsibility is to recover all the company’s assets from the leaving employee before their leaving date. These can include an ID card, Laptop, uniform if any, keys, and other assets. And the reporting authority also reclaims company files, folders, inventory of supplies, swipe cards, etc.


Permissions and access update to IT department

After that, HR should work with the IT department to make sure that the employee’s login, PC access, and entrance access should be revoked, and other relevant information should no longer be available to them. These all are important things to ensure the security of the company.

Conduct the final exit interview

It is one of the essential parts for the employer to conduct the final exit interview of the employee exiting process. It is the last communication with the employee when an employee is still part of the company. Here, HR can know the reason behind the departure and can give the chance of retaining the employee. And the company should take the feedback from a leaving employee. And work on that for better results because it can be valuable for a company.

Here are some questions to the employee –
Why did she/he decide to leave this company? (Reason behind this)
How can we support the employee in your role?
What did you like about the role?
What did you dislike about your role most?
How can we improve our company culture?
Did you have the essential tools needed for your role?
Would you like to share any concerns about the company with us, so that we can improve or change it?

F&F and relieving letter

Finally, it’s time for the employee’s full and final settlement. You need to include the following in FFS – bonuses, unpaid salary, reimbursements, gratuity, pension, and encashment of the leave. Once the amount has been processed, you need to send the employee a relieving letter. Ensure that you mention the compensation, tenure, and designation in the letter.
To make things easier and smooth, Hr also makes a resignation kit for employers. That holds a relieving letter template, exit interview sheet, and overall checklist.

Employee Exit Process Checklist

An employee exit process checklist should include all these documents –

employee exit process

1. A company must share transfer and deposit options, in case of employee loans if any.
2. Transfer of ESIC and PF.
3. Medical claims can settle off.
4. If any bonuses or incentives are pending, it must be effected under relevant documentation or cleared off.
5. HR should ensure that PF and ESIC are Transferred in a smooth process for the employee. Because PF and ESIC are valued possession of an employee, that is transferable from one company to another company.

At last, the company can bid farewell to the exiting employee. The Company can also acknowledge the long-term of an employee’s service by giving keepsakes or placards.

This brings us to the end of our discussion on the exit formalities of an employee. If you have any questions or comments, drop them in the comments section below.

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