When an Employee Resigns: HR’s Key Steps for a Smooth Offboarding

At PeopleLAKE, we believe that managing people well doesn’t stop when they walk out the door — it includes how you handle their exit.

Resignations are a natural part of every organization’s life cycle. Employees grow, new opportunities arise, and sometimes, it’s simply time for a change. While it can be challenging to lose valuable talent, a well-managed offboarding process protects the company’s interests, ensures compliance, and leaves a lasting positive impression on the departing employee.

Let’s explore the key steps HR should take when handling a resignation — with care, professionalism, and compliance in mind.

1. Acknowledge the Resignation

When an employee tenders their resignation, the first step is to formally acknowledge it in writing. This sets the tone for a respectful and organized exit process.

The acknowledgment should include:

• Confirmation of the resignation notice,
• The final working day (based on contractual notice period), and
• Any important next steps, such as handover expectations or exit procedures.

A clear acknowledgment prevents misunderstandings and establishes a documented record of communication.

2. Verify Notice Period and Leave Balance

Once the resignation is received, HR should review the employee’s employment contract to verify their notice period obligations.

Check whether the employee:

• Will serve the full notice period, or
• Intends to buy out the remaining days (by paying in lieu of notice).

At the same time, review the employee’s annual leave balance. Unused annual leave should either be utilized before departure or encashed and included in the final payroll.

3. Conduct Exit Clearance

Before the employee’s final day, it’s essential to ensure all company property is returned. This includes:

• Laptops and IT equipment,
• Access cards or office keys,
• Company documents or records, and
• Any other business-related assets.

The exit clearance not only protects company property but also helps maintain data security and confidentiality.

4. Ensure a Proper Handover Process

A smooth handover is crucial to prevent business disruption. HR should coordinate with the employee and their direct manager to ensure that:

• All key responsibilities and projects are transitioned properly,
• Work files and documentation are handed over, and
• Relevant contacts or information are shared with the successor or team.

A structured handover ensures business continuity even after the employee’s departure.

5. Submit CP22A/CP22B (Tax Clearance)

This is one of the most commonly overlooked steps, yet it’s a legal requirement in Malaysia.

Employers must submit Form CP22A or CP22B to LHDN via e-SPC in MyTax at least 30 days before the employee’s final working day.

This allows LHDN to process the employee’s tax clearance and determine if there are any outstanding tax liabilities before the final salary is released.

6. Conduct an Exit Interview

Exit interviews provide valuable insights into your organization’s culture, management, and employee experience.

Whether done face-to-face or via a digital form, the goal is to:

• Understand the reason for resignation,
• Identify any underlying workplace issues, and
• Gather feedback for continuous improvement.

Handled professionally, an exit interview can turn a resignation into a learning opportunity — and even leave the door open for future rehiring.

7. Process Final Payroll

The final payroll is more than just paying the remaining salary — it must be accurate, compliant, and transparent.

The final payout should include:

• Salary up to the last working day,
• Payment in lieu of notice (if applicable),
• Leave encashment, and
• Statutory deductions such as EPF, SOCSO, EIS, and PCB.

Ensuring that all payments and deductions are processed correctly demonstrates professionalism and helps maintain trust.

The Importance of a Graceful Exit

How a company handles an employee’s exit says a lot about its culture. A respectful and transparent offboarding process not only protects the company legally but also enhances its reputation as a fair and people-focused employer.

Remember, today’s exiting employee could be tomorrow’s client, business partner, or even a future rehire.

At PeopleLAKE, we help organizations ensure every exit is handled with care and compliance — because every stage of the employee journey matters.