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Employee Exit Policy

Employee Exit Policy | A Brief Guide

An effective Employee Exit Policy is key for the organisation to make sure a smooth and formal offboarding process of the employees. The exit policy serves as a structure to manage terminations, resignations, and retirements in a consistent and compliant way. It creates a proper outline of the procedures and responsibilities for the departing employee and the employer, covering areas such as notice periods, return of company property, full and final settlement, and confidentiality obligations. By implementing a well-defined exit policy, employers can uphold transparency, protect company assets, and maintain positive relationships with offboarding employees while also minimising operational disruptions and legal risks.

In this post, we will discuss the following points on employee exit policy.


What does an Employee Exit Policy mean?

An employee exit policy refers to the employee offboarding policy, procedure and protocol that the company follows when an employee leaves the organisation due to termination, retirement, resignation and other reasons.

Purpose of an exit policy

It proposes to ensure a smooth transition for both the leaving employee and the company. The exit policy helps to ensure legal compliance, protect company assets, maintain confidentiality and security, get feedback for improvement, and maintain positive relations. This policy outlines steps and obligations for employers and employees, reducing the risk of legal disputes and liabilities. It also helps to get the valuable feedback from leaving employees that can be used to enhance HR practices, employee engagement, and company culture. Additionally, it contributes to positive relations and a positive employer brand perception.

Scope of an Employee Exit Policy

This employee exit policy provides various aspects related to employees leaving the company.

It includes the procedure for 

  • Resignation, termination, 
  • exit formalities, 
  • Notice period, 
  • Final payment and benefits, 
  • Data security & information retention
  • Returning company assets, 

Offboarding checklist and others.


Employee exit policy involves various steps for the smooth offboarding process for both employer and employees.

Termination and Resignation Notice

In case of Termination, the employee can request for review of termination by the review committe, and provide a clear explanation for such termination. If the employee wishes to exit from the employement, then he/she should write a formal resignation letter to their immediate manager and HRD informing on their intent to leave the organization.

  1. Before receiving the resignation of the employee, an employer shall have a formal meeting with the employee, where the employees intent to resign shall be identified. The manager may convenience the employee to withdraw the resignation. If still, the employee wants to leave the organisation then the HRD will be informed to proceed with the offboarding process.
  2. Managers will have to accept the employee’s resignation and send a mail to HR with the exit reason and last working day of the employee.
  3. In case of termination, if the review committee find that the employee should be terminated, then the manager /HR will notify to same to the employee. If the review committee find such termination non-justifiable, then the termination with be withdrawn.
  4. For termination, the manager needs to KT is completed and then inform HR with the last worked days of the employee.
  5. Before releasing the employee, ensure that the employee has returned all company assets, such as a laptop, mobile or any other device. With complete NOC, it should be handed over to HR to take further action. Lastly, conduct the exit interview to review the benefits after resignation.
  6. If an employee is coming under any medical coverage, then it should be terminated on the last date of the employee.

In Case of Employee’s Death

  1. After getting the information of the employee’s death, the manager needs to inform to HR so that they can coordinate with the employee’s family members for the documentation and then HR can take the next steps.
  2. Then, the appropriate payment and benefits from the benefits plan, such as insurance and others, are processed by the administrator.
  3. The manager has to ensure that the payroll office disburses the employee’s benefits, such as incentives, bonuses or if any other details are there.
  4. Employee’s final pay and benefits will be disbursed to their nominee as per the policy.

What are all the conditions for termination in an exit policy?

Some circumstances could be there when the employer can terminate the employee –
  • An employer can terminate the employee when an employee constituency fails to reach the target or meet the job performance despite receiving coaching, feedback, and opportunities for improvement.
  • If any employee is involved in any serious misconduct, such as theft, violence, discrimination, harassment, fraud, or any other.
  • Employees can be terminated if they breach the contractual agreement, employment contract, or any other non-compete agreement.
  • Due to the volition of company policy, rules and procedures, such as IT security guidelines, safety protocol and other guidelines.
  • Due to economic factors, one can terminate the employee such as financial difficulties, budget constraints, or business downfall leading to the need for workforce reduction or layoffs.
  • If an employee is engaged in any criminal offenses in or outside of the organisation, then it could be the reason of termination.
  This concludes our discussion on employee exit policy. Please feel free to share your questions and opinions on this topic by commenting below.

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