Introduction
This article outlines the process for terminating a participant from an Employee Stock Ownership Plan (ESOP) within our platform. Termination involves handling all assets in accordance with the specific scenario selected to the participant.
When to Use the Termination Process
Employee Termination: Initiate when a participant leaves the company.
Change in Entity: Applicable if a participant's type changes (e.g., transitioning from employee to freelancer).
Process steps
Creating a Termination
Selecting a Participant
Choose the participant who is to be terminated. The selection box includes a search feature, so if the participant isn’t immediately visible, type their name to locate and select them.
If the participant is involved in ongoing processes, termination cannot commence. These processes must be completed, deleted, or otherwise resolved first. This is necessary because allocated or reserved assets may not be accurately processed during termination, leading to discrepancies in the final outcome.
Participants without any assets or awards can also be terminated. This action won’t affect any assets or processes but can be useful for generating termination documentation when needed.
Setting the Termination Date
The termination date is a critical field indicating the cut-off date for asset processing. By default, assets vested before this date are retained by the participant, while unvested assets are forfeited (applicable in the "Good Leaver" schema).
The termination date can be set retroactively or for a future date, with no restrictions.
Setting the Termination Scenario
For each plan in which a participant is enrolled, a specific schema must be chosen within the termination scenario field.
There are two default termination schemas:
Good Leaver: The participant retains assets vested prior to the termination date and forfeits all unvested assets. This is the typical scenario for most terminations.
Bad Leaver: The participant loses rights to all assets. This scenario applies in specific situations defined in the plan terms, usually involving significant breaches or contract violations.
Note that your plan may have different schemas if they were specifically defined in the plan terms.
Adding a Personal Email
Participants will likely lose access to their work email upon leaving the company. If they retain any assets, they will need access to the Eldison platform post-termination. Therefore, login credentials and all notifications will be updated to their personal email address.