employee resignation process, exit formalities

Change is constant and employee resignation defines it very clearly. People do not join organizations to stay forever. Therefore, companies should always be prepared to accept resignations and hire new employees. Some employees become valuable assets during their tenure but they also leave organizations and move on with their respective careers. There are many reasons for employee resignations. Some do not look genuine but if an employee decides to leave, you have limited options. You can retain an employee or let go it depends on the mutual understanding. Above all a retention offer also depends on the business requirements of the company. The resignation process also changes with profiles. For example: the board member resignation process is different from the regular process of quitting a job. Let us understand the employee resignation process and see how this works.

Additionally, we will also touch other important parts like notice period and exit formalities.

Parts of Employee Resignation Process

First of all this is a multiple step process and changes company to company. There is no standard rule for the employee exit process globally. Therefore, companies make this as per their business model. But after studying it for a few companies I realized that it is similar in nature. For example, the resignation process in banks is different from the resignation process in Wipro (IT company). But there are similarities. Depending on similarities here is a list of steps you can use in your company. Most companies follow some or all of these.

  1. Employee Resignation
  2. Serve Notice Period
  3. KT – Knowledge Transfer
  4. Last Working Day and Exit Formalities
  5. Clearance from all associated departments
  6. Relieving Letter and Experience Certificate
  7. Employee Fund Release

All these are standard steps of employee resignation in a company. Let us try and understand each one of them in little more detail.

1 – Employee Resignation

A resignation letter is the first document that an employee submits when he or she decides to exit the organization. There are many reasons for why employees resign and many times they also change their mind. It all depends on the individual and the company. This comes under employee retention. But let’s imagine the employee resigns. Some companies also have a resignation acceptance process. You can read the details in resignation related questions.

2 – Serve Notice Period

No company likes surprises when it comes to their employee exit policy. Due to this they implement a notice period. The notice period term varies between one week to three months. This depends on how critical the profile is. For example: notice period of sales executives may be different from notice period in software development.

3 – Resignation Process is incomplete without a KT – Knowledge Transfer

KT or is knowledge transfer is the most part of the process before an employee leaves the organization. People leave organizations but the work goes on. Someone else does it. Due to this employees transfer their work related details to the new employee (replacement). Sometimes training is also involved due to strict quality measures. Software industry is a good example of this. The whole project can fail due to no or poor knowledge transfer. New employees cannot take more than expected time to understand the project. Companies allow early exit also after successful KT.

4 – Last Working Day and Exit Formalities

As part of the employee resignation process, exit formalities confirm that the employee is leaving. In this process HR takes feedback from the employees and submits all the company property under his / her possession.

5 – Clearance from all associated departments

All this happens on the last working day of an employee. An employee needs clearance from all the departments. The objective is to make sure there are no pending dues (advances) or any assets. In case of pending dues, companies adjust this amount into full and final settlement.

6 – Relieving Letter and Experience Certificate

In case of an employee joining a new company. The employer asks for a relieving letter. This works as an initial proof of employment. There is a standard relieving letter format companies demand. It talks about total employment tenure. Later after a few days the employee also receives an experience certificate. However, some companies issue a single document for both cases.

7 – Employee Fund Release is last step of Resignation Process

This is the last part of the employee resignation process. This is also one reason why employees leave companies. We are humans and we plan for the future. All employers deduct part of employee salary and put it into employee funds. Employers also contribute some amount. Employees get all this money at the time of retirement or exit.

Employee Termination Process

One of the toughest decisions an employer makes is to terminate an employee. Tough because it is always an unfortunate call and nobody wants to do it. But there are many reasons for employee termination. All employees are not loyal to the organization. Being loyal does not always mean staying longer. Employees do unlawful activities and many times break community rules also. Therefore, they need to leave but employers can use a better option than terminating an employee.

How companies use the Resignation Process to Terminate Employees?

Yes this is absolutely true. But in most cases this happens due to some escalations. This is just one of the reasons for terminating employees. But from a company’s perspective terminating an employee is never a preferred choice. This not only impacts the employee but also the company image. Therefore, companies find a middle ground. Instead of terminating an employee, ask to leave the company. The only difference is that the employee does not serve notice period as part of the resignation process. In this case the employee writes personal reasons most of the times and resigns.

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