Employee Clearance

Meaning & Definition

The employee clearance process is the formal termination of an employee’s employment (resignation, retirement or termination). Employee clearance is important because it ensures that an employee has returned all company property, paid all outstanding obligations and has completed all exit procedures in order to receive a full and final settlement. Clearance from the employee goes through multiple departments, such asHR, information technology, Finance, and administration.

Important Features of Employee Clearance

• Ensures timely collection of all company assets, including laptops, employee ID cards, and all documentation owned or provided to employees. 
• Enables and ensures accurate processing of Full & Final settlements without employee disputes. 
• Reduces risks to company data security by disabling company systems (Core and Non-Core) and email access. 
• Maintains proper records and documentation for compliance with legal requirements during employee exit. 
• Facilitates the successful transfer of duties and responsibilities, as well as all knowledge, to successors.

Statutory & Policy Alignment 

• Under the Payment of Wages Act of 1936 (if applicable), full and final settlement must be in accordance with those relevant provisions of law.
• In addition, each of the Shops and Establishments Acts can have its own timeframes for settling amounts owed following the termination of an employee.
• The employer must also ensure that they have made all required statutory payments to be paid on behalf of that employee per the relevant laws.