Exit management for startups

When an early employee resigns

Record the resignation in ZeniaHR the day it comes in. ZeniaHR works out the last working day using the notice days in your work terms policy and marks the person as on notice. Startups often keep notice at 30 days, with 60 for senior roles through per-grade overrides. Use the notice period for a written handover: systems they own, admin accounts and passwords moved to a founder, vendor and customer contacts introduced to a successor. Choose one of the 20 structured exit reasons each time, because in a small company three exits for the same reason already make a pattern.

Layoffs after a funding crunch

When runway shrinks, founders sometimes have to let people go. For a worker with at least one year of continuous service, retrenchment needs one month's written notice with reasons, or wages in lieu of notice, and compensation of 15 days' average pay for every completed year of service. Read the notice and termination rules, check your standing orders where they apply, and take legal advice before acting. Tell people in person, pay what is due on time, issue relieving and experience letters promptly and offer references. People remember how a layoff was handled long after the round closes.

ESOPs, notice pay and the final settlement

What happens to ESOPs on exit is set by your ESOP plan: typically unvested options lapse and vested options can be exercised within a window. Tell the leaver in writing and handle it with the company secretary, outside payroll. The cash settlement goes through Direct Payroll: salary for days worked, leave encashment where the policy allows, notice pay or recovery, and gratuity for anyone with five years of continuous service. Wages are due within two working days of leaving, so use an off-cycle run instead of waiting for the monthly payroll.

Keeping the door open

Good people leave startups to build something of their own, and some come back later, occasionally as the next engineering lead. Previous employees stay in ZeniaHR's records with their full history, so a rehire does not start from zero. Ask every leaver for a short exit conversation and write down what you learn. If the reasons point to pay, workload or one particular manager, fix that before the next resignation arrives.

How to set it up in ZeniaHR

1. In the work terms policy, enter one notice figure for probationers and another for confirmed staff, overriding it for senior grades where needed.
2. Log each resignation on the employee record on the day it arrives, which fixes the last working day and the on notice status.
3. Use the 8-item exit checklist and pick one of the 20 structured exit reasons for every leaver.
4. Add leave encashment, notice pay and any recoveries as payroll inputs for the final settlement.
5. Pay the leaver through an off-cycle run instead of the monthly one, so the two-working-day deadline for wages is met.
6. Hand over the relieving letter and experience letter, drafted from the HR letter library, on the final day.

Read more about employee records and exits in ZeniaHR.

Roles this applies to

Frequently asked questions