End-of-Employment Checklist: Covering All the Bases When Employees Leave

Date: July 24, 2009

There are a number of factors to consider when an employee leaves your small business. A termination can be:

  • voluntary, when an employee leaves for another job or resigns for personal reasons; or
  • involuntary, including layoff, discharge for cause or job abandonment

Depending on company size and the nature of the termination, a few end-of-employment considerations should be addressed. Some of these apply to all terminations, but some apply only to certain kinds of employee departures. (Special cases such as retirement and departure for medical reasons are excluded here.)

Voluntary Termination

  • Indicate whether proper notice was provided. Any record of termination should show whether the resigning employee gave reasonable notice (usually at least two weeks).
  • Obtain signed permission to respond to reference requests. This is a simple legal safeguard.
  • Explain your rehire policy. As a matter of policy some businesses will rehire former employees but some will not.
  • Exit interview. Resignations of employees, especially valued workers, should raise retention concerns. An exit interview, conducted by someone other than an immediate supervisor, can be helpful in identifying reasons why employees quit. To this end:
    • Develop a list of exit interview questions.
    • Always try to learn the reason for leaving.
    • Ask specifically about relations with the immediate supervisor.
    • Ask for suggestions for changes or improvements to the job or the company.
    • Be prepared to investigate any substantive complaints that might be offered (sexual harassment, favoritism, etc.).

 Involuntary Termination

  • Layoff
    • Provide Unemployment Compensation information and application instructions for those who are eligible.
    • Obtain signed permission to respond to reference requests.
    • Explain recall rights, if any.
    • Explain severance pay plan, if any.
    • Explain outplacement services, if any.
  • Discharge for Cause (“Firing”)
    • Ensure that reasons for the termination are thoroughly documented and backed up with company policies.
    • Obtain signed permission to respond to reference requests. (Be wary of cutting deals “for the record” that obscure the real reasons for a termination; these can backfire.)
  • Job Abandonment.
    • It’s a common policy to terminate in absentia an employee who fails to show up and fails to call the workplace for three consecutive work days (commonly referred to as “3 days no-call, no-show”).
    • When terminating an employee for job abandonment, send notice by certified mail to the person’s last known address.

All Terminations

  • Ensure employee privacy. Regardless of reason for termination, every departing employee is entitled to privacy for the termination discussion.
  • Return of company property. Determine whether the departing employee had been issued company property—keys, tools, uniforms, equipment, etc.—and secure these items before completing the termination. This should also include return of an employee identification badge if the company uses such.
  • Review benefits status. To the extent that the company may offer benefits beyond those required by law (Workers Compensation, etc.), cover the following as applicable:
  • If health insurance is in force, a departing employee must be notified of rights under COBRA (Consolidated Omnibus Budget Reconciliation Act) to continue health insurance at his or her own expense.
  • If other insurance, such as life insurance, is provided, any available conversion rights should be explained.
  • If a departing employee participates in a company pension plan, the employee’s vesting status, if any, should be provided in writing.
  • The status of vacation allowance, if any, must be determined and explained. Depending on individual policy, some companies carry ongoing vacation accruals and pay the balance upon termination; some businesses, however, call for forfeiture of vacation upon termination for certain reasons.

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