Making Departures Go More Smoothly
According to the Society for Human Resource Management (SHRM), the average annual turnover rate for businesses in the U.S. is 19 percent. Therefore, a small business with 30 employees will lose about six of them every year on average.
So the question isn’t whether or not you will lose any employees this year. Instead, the question should be what can your business do to make the employee departure process go as smoothly as possible — for both your company and your departing employees?
There is a wide range of tasks that must be accomplished whenever an employee leaves your company, regardless of the reason for the departure. For example, there are forms that need to be filled out and internal systems (such as payroll, human resources and IT) that need to be updated. There are also conversations and meetings that need to be had with the departing employee.
Below are some of the topics you should consider as part of an employee termination checklist that should be followed whenever workers leave your employ. Distribute your checklist to all of your managers and supervisors so everyone is on the same page and following the same procedures with regard to employee departures.
Voluntary or Involuntary Departure?
You should consider documenting if the employee’s departure was voluntary or involuntary. In other words, did the employee leave on his or her own or was the employee terminated for some reason?
If the departure is voluntary, ask the employee to draft a resignation letter. If the employee didn’t write one, write a resignation confirmation yourself and ask them to sign it before they leave. Also you should consider scheduling and conducting an exit interview.
If the departure is involuntary, you should explain the reason(s) for the firing or layoff in a formal termination letter.
Regardless of the reason for separation, it is important to maintain appropriate documentation. You should reach out to your representative for further information.
Also be sure to provide the departing employee with Worker Adjustment and Retraining Notification (WARN) Act and Older Workers Benefit Protection Act (OWBPA) notices if these are required. For employees who are eligible for severance, check with your legal representative about providing them with a severance agreement.
Benefits and Compensation Information
You’ll need to provide departing employees with detailed information and forms about their benefits, compensation and employment agreement. This typically includes information about the following:
- Continuation or termination of benefits, such as health insurance via COBRA and life and supplemental insurance if this is offered.
- Any funds that are remaining in Health Savings Accounts and reimbursement deadlines.
- The balance of any remaining vacation time/PTO and how this will be processed upon departure.
- Options for distributing funds held in a company-sponsored 401(k) or other retirement account.
- Company policy with regard to any outstanding balances owed to your company for things like education loans or payday advances.
- Any non-compete or confidentiality agreements signed by employees.
It’s often a good idea to obtain written permission from departing employees for you to respond to employment verification requests or reference checks you may receive after they leave. Also consider giving all departing employees a change of address form they can fill out if they move later to ensure that they receive a W-2 form from your company at tax time.
Of course, you need to remove departing employees from your payroll system so they don’t continue to get paid. Make sure your HR department or payroll processor receives official notification of the departing employee’s last day of work and instructions about how to deliver his or her final paycheck with any adjustments for earned but unused PTO, outstanding balances owed to the company, severance pay, etc.
Note: The Fair Labor Standards Act (FLSA) requires employers to hold onto all employees’ payroll records for at least three years. And the IRS requires employers to maintain employment tax records (such as W-4 forms, dates of employment and personal information) for at least four years.
Collecting Company Property
There should be a process in place to make sure that any company property used by departing employees is returned to you before they leave. This may include the following:
- Laptop computer
- Cell phone or other mobile devices
- Car or other vehicle
- Credit and/or debit cards
- Keys, key fobs and keycards
You also need to make sure that departing employees no longer have access to your physical premises. This includes disabling their security access codes and collecting all keys and key fobs that might give them entrance to your facilities.
It’s just as important to ensure that departing employees no longer have access to your company’s virtual premises — or in other words, your computer and communication networks. For example:
- Terminate their login credentials to your intranet and any other internal computer networks and databases.
- Disable their company email accounts and remove their email addresses from group distribution and other lists.
- Disable their telephone extension and voicemail and remove their name from phone/email directories and online employee listings.
Be Proactive and Plan Ahead Now
Employee turnover is an unfortunate fact of life for businesses. Instead of pretending that your employees will never leave your business, it’s smarter to identify specific processes and procedures that will be followed consistently with every employee departure.
Once you’ve documented these procedures, share them with all of your managers so they’re followed consistently throughout your company.
|Back to Top