By your own admission, the employee is presently not on active duty. He has resigned from his job and needs to attend to his daughter's medical problem. In support of her medical condition, he has also submitted the necessary documents. Then, what is the problem with the early release? Let that person be released when he needs to be with his family.
Releasing him early will show that the administration of your company is empathetic and shows clemency when needed. It will signal to all other employees that the rules are not followed dogmatically. However, early release should not become a trend, and it should be communicated to all other employees, albeit informally, that decisions regarding early release are made on a case-by-case basis, and there cannot be a particular trend.
Thanks,
Dinesh Divekar