Employee Termination Checklist: Everything You Need to Know
An employee termination checklist creates an outline for the exit processes within your business and contains information you need to give terminated employees.10 min read
2. Your Employee Termination Checklist
3. Why Is an Employee Termination Checklist Important?
4. How to Handle Termination
5. Termination Best Practices
6. Frequently Asked Questions
7. Seek Legal Counsel
Employee Termination Checklist: What Is It?
An employee termination checklist creates an outline for employee exit processes within your business. The checklist contains information you need to give terminated employees, items you need to retrieve from exiting employees, exit interview information, and more.
An employee termination checklist is a master list of the things you and your business need to do when an employee is leaving their job. It is important to follow the checklist. Whether the employee is moving on to bigger and better things, perhaps they are pursuing their dream of travel or going back to school. Occasionally, an employee is terminated for failure to perform their job duties. Either way, it can be easy to overlook important steps in the termination process. Having an easy to follow employee termination checklist will prevent any missteps.
Employee termination checklists help you create a smooth transition for the former employee and for your organization. They also keep you following the same process each time an employee leaves. You protect yourself against possible future legal issues if you create a comprehensive employee termination checklist.
Your Employee Termination Checklist
Checklist Item: Basic Data
__ Begin termination documents: Your termination checklist will start with the employee's name, job title, and last day of work. It might also include the department they worked in, the reason for termination, their employee or company number, the Human Resources person working on the termination, and the date the list is completed.
Checklist Item: Tell Human Resources
__ Notify HR: When an employee hands you a letter of resignation, tell HR immediately. If the employee verbally tells you they're leaving, ask them to write an official letter for HR records. Most employers ask for two weeks' notice. You'll need to notify other people within and outside of the company, including receptionist(s), IT, payroll, security, union, Credit Union or bank, mobile provider, credit card provider, insurance provider, professional associations, and customers and clients who have open communication with the employee.
__ Put Documentation in Employee File: All documentation, including receipts for returned items and termination letters, need to go into that employee's file. You can include documentation for discipline, warnings, and performance reviews that help show why you're firing that employee.
Checklist Item: Do an Exit Interview
__ Conduct Your Exit Interview: Exit interviews are confidential meetings with HR to find out about your business's work environment. Exit interviews also give the company a chance to tell employees what to expect about their final paycheck and returning company property. HR will encourage the employee to do an exit interview and will schedule it. Management receives summarized results about what HR gathers in the exit interviews.
__ Give the employee a chance to comment about their work experience: Find out how they related to their coworkers, how they felt about the work and the environment, and how they looked at conditions and company practices.
__ Get a signed agreement: If your terminated employee will be looking for other jobs, have them sign an agreement that lets your business verify their employment and give out reference info.
__ Get updated information: Give your employee a form to update their address if they move within the next year. (You want to do this because W2s will come back to you if you don't have the right address.)
__ Verify current information: Verify that their emergency contact information is current (you can use it to find the right address for the W2 if you need).
Checklist Item: Communicate With IT
__ Notify the administrator: Tell the network administrator and IT staff the date that the employee's computer and network access needs to stop.
__ Move clients: Arrange someone to take over the leaving employee's accounts so your company doesn't lose any customers, clients, or contact information. Keep their phone lines and e-mail accounts active so you don't miss important business communication. Sixty days is a typical amount of time businesses leave these accounts active before shutting them down permanently.
__ Erase data: Have IT check and erase all employee computers, tablets, or phones so someone else can use them.
Checklist Item: End Building and Property Access
__ Change alarm codes: Disable any codes to enter the building the employee has on the day they leave. If everyone uses the same codes, change the codes. (This will be immediate if you're firing the employee.)
__ Remove physical access: Disable their key card. Get back any keys they have.
Checklist Item: Get Company Property Back
__ Create a list: Check your records to make sure you know everything your employee needs to return. Share the list with the employee so they can complete the task.
__ Document the item returns: Give the employee receipts for the company items they returned, for both your and their records. Get a list of your employee's device and account passwords.
__ Make sure employees turn in the following:
__ Computers (Computers might include modems, software, printers, and terminals)
__ Calling Cards
__ Designs or formulas
__ Customer Lists
__ Credit cards (Cut the card in half and give it to the HR department)
__ Uniforms (Protective clothing and clothing with the company logo on it)
__ Safety Equipment
__ Price Lists
__ Company files
__ Company financial information
__ Company manuals
__ Company vehicle
__ Other company property (If the employee purchased anything for work, like software, they need to return it.)
Checklist Item: Deal With Benefits
__ Write a benefits status letter: When an employee leaves your company, give them a letter indicating the status of their benefits. Include information like when benefits expire and how to take advantage of COBRA (Consolidated Omnibus Budget Reconciliation Act), so they can seek other options. Check with your insurance provider to be sure you're complying with COBRA requirements.
__ Vacation and sick pay: Employees you are terminating get paid for up to 30 days of vacation time they accrued but didn't use. If the employee used vacation time they didn't accrue, subtract the payment they got for this vacation time from their last paycheck. Employees you are terminating should also get paid for any accrued sick days they didn't use.
__ COBRA compliance: US organizations need to comply with the 1980 Consolidated Omnibus Budget Reconciliation Act (COBRA,) which means you have to offer to extend benefits for employees and dependents for a certain amount of time after they're terminated. These include health insurance, retirement plans (401k, pension, etc.), life insurance, outplacement, unemployment insurance, HSA or HRA, and expense account plans. Send the employee a Notice of Qualifying Event Form. Send them an Election Form. Use e-mail or express mail if your insurance provider doesn't send these documents out (many do).
__ Payroll advance repayment: Unpaid payroll advances you gave to the employee come out of their last paycheck. Unpaid travel advance balances come out of the last paycheck.
__ Payment of money the company owes the employee: In the last paycheck, pay the employee for unpaid commission, unpaid expenses for business reasons that they turned in on an expense report, severance pay, and health or flexible spending account balances.
__ Send the Final Paycheck: Your state law will tell you when you need to send the check and other helpful information. It might be: on the date of termination, on the next payday, or a different date (like three days after termination). State law will also tell you if direct deposit or another delivery method is acceptable. Make sure the employee has finished their last time sheet so you can send the final paycheck.
__ California employers: Medi-Cal members need the Health Insurance Premium Program Notice
Checklist Item: Go Over Employee Agreements
__Get records of agreements the employee signed: Review the terms of the agreements with the employee. If the employee didn't sign these agreements, go over portions of the employee handbook that instruct employees not to give up company information or trade secrets. Records may include:
Why Is an Employee Termination Checklist Important?
Create a comprehensive employee termination checklist you can use when you fire someone or when someone quits. The termination process goes smoothly when you have an employee termination checklist in place.
If employee termination goes badly, you might be at risk for a later lawsuit from the employee. If you follow a set procedure and give the employee the reasons you're terminating them, you reduce your risk.
Your checklist can take several forms
- A physical list with check-boxes (consider including a N/A box, too)
- An exit form with space for comments
- A hybrid, or a form with both elements included
Your employee termination checklist ensures you've provided employees with the termination documents they need.
- In California: Notice to Employee of Status Change and California Employment Development Division unemployment booklets
- In New York: a notice of the exact termination date and the date when benefits end (within five days of the termination)
You can create a termination checklist for employee use, too. It might include:
__ Clean out your desk area
__ Write a resignation letter
__ Schedule an exit interview
__ Return company items
__ Create personal back-ups and then delete personal information on company computers
__ Set up e-mail forwarding
__ Give your manager your passwords to software and accounts
__ Delete company software from home computers
How to Handle Termination
What to Do Before Terminating the Employee
When you're firing an employee, you have less time than the two weeks' notice employees typically give when leaving an organization.
__ Before terminating any employees, create a "script" with steps and things to say to help this kind of meeting go more smoothly.
__ Talk to the legal department to make sure you're following any local, state, or federal regulations. Also, talk to them to reduce the likelihood of getting sued later.
__ Look through the employee file for any signed agreements (non-competes or non-disclosures) to print out and give to the employee during the termination meeting.
__ Talk to IT and have them cut off the employee's access to networks and computers, including remote access, while the termination meeting is happening.
__ Choose a time and a place to have the meeting. Use a conference room or their office in case they want to argue, so you can leave instead of kicking them out of your office.
What to Do During Termination
__ Tell the employee they don't have computer access anymore but that you'll help them get personal information off company computers.
__ Ask employees for company property back, and if they have any at home, schedule a time with them to pick up the items.
__ Find out if they've emailed any company information to themselves (including documents) and tell them they need to delete those documents.
__ Pay attention to claims about discrimination. If the employee talks about discrimination at work, write down what they say and do some investigating. You might need to contact a lawyer if the discrimination was serious.
__ Make sure they know that the decision to terminate them is final.
What to Do After Termination
__ Figure out how they'll get their stuff from their cubicle or office. You can take them back to their desk while they do so, or arrange a time for them to come back.
__ Give the former employee a termination letter and remind them of any obligations they may have.
__ Check if your state requires you to give a reason for terminating the employee, and include it if necessary.
__ Ask them how they want to get their final paycheck (in person or through the mail).
__ Prepare the final paycheck, paying attention to any state and national laws about paying unused vacation or sick time.
__ When you give the final paycheck depends on how they left (were fired, quit, or came to the decision with you mutually).
__ Take the employee's name out of directories and website material.
Termination Best Practices
Tell the employee why they're being fired.
Don't under- or over-exaggerate why you're firing someone. Otherwise, you might end up having to explain your actions in court if the employee sues for wrongful termination.
Follow the company rules about how to terminate someone.
The termination process needs to go smoothly and be the same across the board. If you're new to firing people or new at the business, check with HR to find out everything you need to do.
Treat the departing employee well.
Remember that you're still talking to a human being, no matter how poorly they performed at work. Be courteous and respectful.
Terminate people who need to go.
Don't put off firing someone who isn't performing well. That can affect how other employees feel about work.
Think about a farewell party.
Farewell parties won't always be appropriate, but in some instances sending the employee off is a good thing to do. You show appreciation for that employee's work, and you let other employees see that you appreciate the work done at the business in general.
Frequently Asked Questions
- Do I have to tell the employee why they're being terminated?
The law doesn't require it in most states, but it's a good idea, even for at-will employees. But it's hard to change what you say after you say it, so talk to your business's lawyer for a few minutes to make sure you're not creating any legal risk for yourself or your business later.
- Do I have to tell the state's unemployment agency why the employee was terminated?
If your former employee applies for unemployment benefits, they give their version of what happened. You get notified, and though you're not required to respond, it's usually a good idea. You tell them whether the employee left voluntarily or involuntarily. You also discuss more details if the employee doesn't use truthful information when explaining why they were fired or if the employee talks about legal violations, like discrimination. Again, talking to a lawyer before making your response is the best thing to do.
Seek Legal Counsel
Get professional legal help with your employee termination checklist, letters, or meetings. Search for qualified employment and HR lawyers in your area. UpCounsel screens attorneys to provide you with the resources you need.