HR Exit Formalities Under Indian Labour Laws
| Labour Law / Act | Applicable Threshold | Mandatory Forms / Documents | Timeline | HR Action Required |
|---|---|---|---|---|
| Shops & Establishments Act | 1+ employees | Employment Register Closure Entry Attendance Register Final Entry Service Certificate Issuance | Within 7 days of last working day | Update employment register with exit date and reason |
| Employees' Provident Fund (EPF) | 20+ employees OR Salary ≤ ₹15,000 | Form 19 (EPF Withdrawal) Form 10C (Pension Withdrawal) Form 31 (EPF Transfer) Online PF Settlement | Within 30 days of separation | Process EPF settlement or transfer to new employer |
| Employee State Insurance (ESI) | 10+ employees OR Salary ≤ ₹25,000 | Form 5 (ESI Account Closure) Medical Benefit Continuation (if eligible) Family Coverage Termination | Within 15 days of exit | Close ESI account and inform employee about continued benefits |
| Payment of Gratuity Act | 10+ employees | Form I (Gratuity Application) Form J (Employer Acknowledgment) Gratuity Calculation Worksheet Gratuity Payment | Within 30 days of exit | Calculate and pay gratuity for employees completing 5+ years of service |
| Contract Labour Act (CLRA) | 20+ Contract Workers | Form XIV (Contract Worker Register Closure) Principal Employer Notification Contractor Compliance Verification | Last working day | Update contract worker register and verify contractor settlements |
| Prevention of Sexual Harassment (PoSH) Act | 10+ employees | Pending Complaint Status Check Committee Membership Update (if applicable) Confidentiality Agreement | Before final settlement | Ensure no pending PoSH complaints before employee clearance |
| Industrial Employment Act | Manufacturing Units | Health Record Handover Safety Equipment Return Medical Examination (if required) | Last working day | Complete health and safety formalities |
| Payment of Wages Act | All employees | Final Wage Calculation Deduction Worksheet Wage Register Final Entry Bank Transfer Proof | Within 2 working days of exit | Calculate final wages including overtime and deductions |
| Payment of Bonus Act | 20+ employees earning ≤ ₹21,000 | Pro-rata Bonus Calculation Bonus Eligibility Verification Form D (if applicable) | With final settlement | Calculate proportionate bonus based on eligible working days |
| Leave Encashment | As per Company Policy | Leave Balance Calculation Encashment Rate Determination Tax Implications Calculation | With final settlement | Encash accumulated earned leave as per policy |
Exit Documentation Checklist
| Document Category | Required Documents | Purpose |
|---|---|---|
| Resignation Processing | Resignation Acceptance Letter Notice Period Calculation Handover Completion Certificate | Legal separation documentation |
| Final Settlement | Full & Final Settlement Sheet No Dues Certificate Bank Transfer Acknowledgment | Financial closure |
| Statutory Clearances | Form 16 (TDS Certificate) Relieving Letter Experience Certificate | Tax compliance and future employment |
| Asset Recovery | Laptop/Mobile Return Receipt ID Card Surrender Access Card Deactivation Company Property Checklist | Asset protection |
| Knowledge Transfer | Project Handover Documents Client Transition Notes System Access Transfer | Business continuity |
Exit Timeline & Settlement Matrix
| Immediate (Last Working Day) | Within 2 Days | Within 30 Days | Post-Exit Follow-up |
|---|---|---|---|
| Asset Return Access Deactivation Handover Completion Attendance Closure | Final Wage Payment Leave Encashment Relieving Letter Experience Certificate | EPF Settlement Gratuity Payment Form 16 Issuance Bonus Calculation | Reference Verification Alumni Engagement Compliance Audit Trail |
Critical Compliance Deadlines
| Payment Type | Legal Deadline | Penalty for Delay | Interest Rate |
|---|---|---|---|
| Final Wages | 2nd working day after last working day | Fine up to ₹25,000 | Simple Interest @ 15% p.a. |
| Gratuity | Within 30 days of eligibility | Penalty up to 10x gratuity amount | Simple Interest @ 15% p.a. |
| EPF Settlement | Within 30 days of application | Penal damages @ 12% p.a. | 12% p.a. |
| Bonus Payment | Within 8 months from FY end | Fine up to ₹7,500 | Simple Interest @ 15% p.a. |
| Leave Encashment | As per company policy | Contractual implications | As per employment terms |