How do you offboard employees? A complete checklist.
As a small business owner, there will likely come a time when you have to handle offboarding to smoothly transition an employee out of the workplace. Having a system in place to handle the employee exit process is just as important as a strong onboarding process and can make the transition much more manageable for you and your employees.
Remember, offboarding may be the last time you interact with a departing employee, and how the process is handled can remain top of mind when they are asked about their experience working with you. It’s also something your current employees will likely hear about and remember. Since employee referrals bring in about 30% of candidates — the top source of hires — it’s worth taking a few steps to ensure transitions are smooth.
To help, we’ve created this checklist for offboarding employees, including some important questions to keep in mind for your small business. These tips will help ensure you’re staying compliant and professional as your employee moves on.
Why is offboarding important?
Although there can be a lot of emotion involved, it can be helpful to think of offboarding as just another part of the employee life cycle. Going into it with a step-by-step process will help you avoid any missteps and make sure everything is taken care of before the employee’s departure.
Here is a checklist to work through once you know your worker is leaving:
- Let key people know. Not everyone in your workplace will need to be informed right away, but it’s a good idea to have a plan for how you’ll let your managers and employees know the news. In communicating employee departures to the rest of the organization, there are a few things to keep in mind. If the employee is leaving voluntarily and on good terms, you can consider allowing the employee to announce their decision to the organization. This way, they have the chance to share their decision with the team and flexibility to decide what they do and don’t want to disclose.
- Post the job listing. If you will be filling the vacated position, post a job listing on your website or an industry job board and begin interviewing candidates.
- Transfer employee knowledge to their successor or into documentation. Start out by making sure you (and your employee’s successor) will have access to all the documents, data, or files they managed. This way, you can easily pass them along to whoever may need them next, or take care of the tasks yourself until you find someone to take over those duties.
- Identify and transfer key duties. Once everything is documented, it’s also important to make sure it’s clear who needs to take over the departing employees’ job functions — especially if they have specialized knowledge, relationships, or any other skills that will be hard to replace.
- Schedule an exit interview or send an exit survey. An exit interview is a good way to offer resigning employees an open forum to provide feedback about the job or the overall employee experience. Generally, the person who is conducting the exit interview should approach the conversation from an objective, unbiased perspective. The goal is to learn and find ways to make your company better — not to relitigate any grievances. It’s also important that the information shared in the exit interview remains confidential and is only shared with those who may find the information relevant or necessary for improvements. We’ve gone into more detail about how to do a great exit interview, including what you should be asking in this article.
- Collect company assets. Remember to collect things like computers, tablets, uniforms, keys, ID badges, or security cards on their last day. And if they are working remotely, you’ll need to make arrangements to have their items shipped back to you. You can keep an inventory of the items loaned out to employees in a spreadsheet or in your HR software to more easily track everything. If they have a corporate credit card, it might be wise to close their account completely.
- Provide final payroll and benefits information to the employee. Depending on your state, these might include:
- Details about final paycheck delivery or the paycheck itself if you’re in a state that requires it.
- Final PTO payout if you’re in a state that requires it or your company provides it.
- Any documents your employee will need related to COBRA extension of their health benefits, 401(k) transfer, or unemployment benefits.
- A copy of their resignation letter or termination notice for your files.
Please note that some states have strict deadlines around when final pay must be delivered. In some states it may even be on the last day of work. In the event you’re running an off cycle pay run and need help calculating withholding, our free final pay calculator can help.
- Thank the employee for their service. If they were a hard worker and helped your company grow, saying thank you for their impact goes a long way in helping leave them with a good feeling — and your remaining employees will see how much you value everyone and their contributions. According to a Workplace Trends study, 15% of employees boomeranged — come back to their former company as a rehired employee after quitting — that year and 40% say they would consider it. So if they’ve left voluntarily, keep the door open for a potential return!
- Update your HR files or software including organizational chart and contact information. Make sure you update any contact forms and the org chart in your cloud-based HR software or paper files. You don’t want to find out in the middle of a crisis that your emergency call list is out of date.
- Revoke the exiting employee’s access. Depending on the nature of your workplace, an employee may have access to software, files, or databases. Make sure that any passwords are updated and credentials are revoked or assigned to another employee.
Should my exit process include any employee separation paperwork?
Take time to research your state and city requirements. Many states, such as California and New York, require certain documentation to be provided to employees separated from the business. These typically include information on COBRA, unemployment benefits, separation paperwork, and offboarding checklists. Most states have these available on their Department of Labor website for quick download.
If the departing employee is leaving involuntarily, it’s a best practice to have separation paperwork drafted and ready for the employee to sign at during their termination conversation — even if your state doesn’t require it. It’s helpful to provide written documentation that explains the reason for termination, and what they can expect next. And may help them access unemployment benefits if applicable. Keeping a copy of this paperwork on file also benefits you if there are any disputes in the future about why the employee was terminated.
If the employee is departing due to a sensitive reason (layoff, poor performance, or even outcome of an investigation), that information should stay private. The best way to communicate a departure is to let the team know that this employee has left the organization and that you wish them the best in their future successes. Keep it as brief as possible without disclosing any sensitive information regarding why they left.
Either way, treat departing employees with compassion and keep any conversations regarding their departure confidential.
And as you put the finishing touches on your offboarding checklist, also remember to refer back to your employee handbook. Did you include any policies or procedures regarding resignations of employees or terminations? If so, follow these procedures and stay consistent in enforcing them with all your employees. If you’re not sure, we recommend talking to an employment law expert to make sure everything is handled in a compliant manner.
A little time to develop these steps can go a long way in helping smooth the transition when an employee leaves — and help both your company and your employee move forward gracefully.