How to Make an Employee Exit Agreement

There are an endless amount of possibilities as to why an employee would want to leave a company that he/she works for. However, before that person’s employment is officially terminated, employers need to make sure that the person leaving their company won’t be doing anything that could potentially ruin the business in its entirety.

So, they have to come up with a set of rules and procedures that the resigning employee will have to follow upon exiting the company. This is the reason why employers have to create employee exit agreement forms and this article is going to focus on teaching you on how to make one.

The Contents of an Employee Exit Agreement

This kind of document is used whenever an employee with sensitive knowledge about the company decides to leave (whether the decision is voluntary or not). The whole point of creating an exit agreement is so that employers are protected as well as providing them with legal evidence that can be used in court should the exiting employee decide to violate any of the agreements that have been made. Also, this kind of sample agreement also points out the kind of information the exiting employee may share once he/she is no longer employed with the company.

So, if you want to learn how to create this type of agreement document, then here are the following pieces of information that it should contain:

Return of Company Property

When an employee who is all set to leave the company has possession of any property that the company owns, then naturally it should be stated in the exit agreement that all company property in the employee’s possession must be returned upon simple termination.

Tip: Before you start collecting whatever company property you need to have returned, it’s best that you have a checklist of all the things that he is in possession of the existing employee. By having this sample checklist, you can make sure that you don’t miss out on anything important such as building keys, company laptops, cellphones, or even important documents that contain sensitive information about the company.

1. Non-Disclosure Agreement

Now, this is something that just about every company should have. With a non-disclosure agreement, you’re basically requesting that the employee keep any confidential information when it comes to the research and development of both old and new products or the procedures that take place within the company. Basically, you’re telling the employee not to talk about any important information to anyone who isn’t with the company. So, let’s say that your company has a formula whose contents have remained a secret for the last 20 years. If an employee who has signed the non-disclosure agreement decides to share these contents with a third party, then you can fire that employee as well as filing the appropriate charges against him/her.

2. Agreement to Non-Compete

Employees in certain companies think that they’ve entered and learned about the business long enough where they think they finally have the knowledge to start their own similar business. A lot of employers fear that these people could potentially take away their customers and sees these people as future competition. And, this brings us to the non-compete agreement.

With this, the employee will read and understand that he/ she must agree not to compete with his/her former employer in the marketplace. These kind of clauses are very common in just about exit agreements as this is what protects the company from competing against a possible threat. Because let’s say that you own one of the finest wine shops in town and your employee has gained enough money and knowledge to start his/her own. With the non-compete agreement, you’re basically telling this person that he/she can’t open up a similar business within the next 5 years. The duration of when he/she can’t open a similarly new business is all up to you, but be sure that it’s a reasonable amount of time.

3. Post Employment Obligations

Employee exit agreements are there to legally oblige an employee to the terms of how he/she will exit the company. Everything that’s stated in the agreement document is legally binding within the court of law. This means should the employee break any of them, the appropriate lawsuit will be filed by the company against the exiting employee. This will make the employee understand that he/she will have to follow everything that has been stated in the document that he/she has signed. Also, the main point of having the exiting employee oblige to the general agreements is so that the intellectual property of the company is fully protected.

4. Exit Checklist

Exit agreements are usually signed during an simple exit interview right before the employee leaves the company for good. It’s also very common to include the exit checklist as part of the agreement. The general checklist is simply a series of steps followed by the employer and the employee such as canceling passwords, the return of any company property that’s in the possession of the existing employee and any other particulars.

5. How to Conduct an Exit Interview

Now that you’ve learned how to create an exit agreement, the next thing that you’re going to have to focus on is figuring out why the employee is leaving in the first place. It’s best that you understand this as not only will you get the employee to sign the exit agreement as you conduct the interview, but you will also be able to understand if the employee is leaving because of the problems in your company, or if he/she is leaving for personal reasons. So, here are the steps to help you conduct a proper exit interview:

  • Have anyone other than the employee’s direct supervisor conduct the interview. If it isn’t you, then you should go ahead and do it or you can assign someone else. The reason for this is that it’s possible the general supervisor is the main reason as to why the employee is leaving, making for a very awkward and possibly dishonest exit interview.
  • Explain the purpose of the professional interview. Other than making sure that the exiting employee knows what he/she cannot do once out of the company, you’re there to see if the company has any problems that you can prevent so that you are able to retain your current employees.
  • Keep the process as simple as it should be. The point of the exit interview is to find out why the employee is leaving, so you don’t really have to make it that long. Just a couple of questions that will tell you all that you need and then you’re good to go. You may also see the sample employment agreement templates
  • Make sure that the interview session should be a one-on-one and in a private room. If you conduct the interview in a public area where just about every other person can hear, then it will just lead to an uncomfortable situation for the employee, thus leading to him/her being unable to provide you with the information that you need. Also, if you have multiple staff members taking part in the exit interview, then it will also lead to an uncomfortable situation as the employee may feel like he/she is being ganged up on. So, it’s best to keep it one-on-one as it will allow for more openness and honesty between the professional employee and the interviewer.
  • Encourage the employee to summarize his/her experience with your company. Now, this is the part where you get to learn more about your company. By allowing the exiting employee to talk about his/her experience, then you may just figure out vital information such as certain problems that may have been the cause as to why you have lost a number of employees within a period of time. Also, this may even give you answers to certain questions before you even ask them, so it’s best that you ask the employee to summarize the experience as early as the beginning of the exit interview. You may also like the employment agreement templates
  • Assure the employee that all of the information that has been shared in the exit interview will remain confidential unless the employee says otherwise. There may be a couple of sensitive information that the employee may have shared that he/she would like to keep secret. So to ensure that the employee will tell you everything that you need to know, assure him/her that everything discussed will not be recorded and all the notes that you have taken down while the interview is being conducted will be discarded once the exit interview is complete. You may also see the agreement templates

So, if you want to make sure that your company is protected, you have to make sure that you are able to understand and learn all that you need to know about exit agreements and exit interviews. You may also like the sample agreement templates.

If you would like to learn more about these two particular topics or anything that’s related to them, then all you have to do is go through our site, find the articles that possess the information that you need, and utilize whatever information that you have been able to gather to help you and your corporate business with whatever you need.

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