Employee Termination Smart Steps

by Lynnea Bylund on November 5, 2013

Whether or not a worker departs your business friendly and on their own terms or from being fired for cause, there are several steps a company must take to protect its security, viability and reputation. 

Steps Before Employee TerminationWhen an employee leaves it typically is at a  moment more important than when they first join your staff, because a new employee typically knows little about your business inner-workings.  Conversely, when employees leave they have cultivated a great deal of knowledge about your company, your competitors, your finances and, most importantly … your client list.

Even If It Is A Friendly Departure, You Need To Read This…

Even if the departing employee has performed admirably and has shown no signs of hostility during their employment, there is no way of knowing for sure how they will react when it comes time to part ways.

To help your company stay safe, we have consolidated 7 key steps to take when an employee departs.  Try not to look at these steps as measures to take for problematic employees but rather as a standard set of rules to follow regardless of who the departing employee is and what kind of employment record they had with your business.

From Padgett Business Services

The 7 Steps To Take BEFORE Any Employee Termination:

Step #1: Issue A Final Paycheck – Every employee termination must include a final paycheck, but when they must receive it depends on your state’s laws.  In some states, an employee’s final paycheck must be issued on their last day of work; in other states, their final paycheck may still follow the usual payroll cycle.  There is also the matter of accrued unused vacation time, which may need to be included in the final paycheck.  After payroll has issued the employee’s final paycheck, have the payroll clerk classify the employee as terminated and/or inactive. Do not remove their name from your payroll files since payroll records are to be retained.

Step #2: Collect Company Property – Do not let departing employees walk out of the door for the last time while still in possession of a company car, keys, security cards, company credit cards, computers, cell phones, company manuals or any confidential material.  While this may seem obvious, it is very easy to forget these items when you trust certain employees. 

Step #3: Cancel Credit And Phone Cards – In addition to collecting company credit cards and phone cards, as mentioned above, you should also cancel them.  An employee could have easily copied down the cards’ information for personal use.  And since there is no way of knowing whether this was done, the best course of action is to cancel those cards. 

Step #4: Deactivate Personal Passwords – The departing of an employee is always a matter of security, and one of the chief security concerns is access — access to the building, access to your network, etc.  Be sure to disable any personal passwords or entry codes to the building, especially if you use a biometric system.  Remove any lingering profiles that they may have on the network and institute a company-wide password change to anything with a generic login.

Step #5: Address Confidentiality Policies – This coincides with the collection of company property.  Since you cannot collect something intangible like knowledge, it is pertinent that you debrief departing employees.  Review any non-disclosure agreements and/or non-compete clauses that you may have arranged with your employees.  It is crucial that you make clear their obligations to adhere to those arrangements.  We also suggest that you give them a copy of the agreement for future reference. 

Step #6: Decide Who Will Handle Projects – To make certain that your employee’s departure does not impact the company’s day-to-day productivity, create a plan that distributes their responsibilities among other employees.  Also, have the departing employee personally brief these employees, but be cautious about this; it can sometimes be caustic if the person is not leaving on good terms.  Make sure that you start this process early in order to give everyone involved enough time to get coordinated on picking up the extra work.

Step #7: Assign A Point Of Contact – Even though an employee is leaving, they may still need to communicate with your company for several weeks, especially regarding references.  Give them a point of contact within the company from whom they can solicit needed information.

In Summary: Whether your employee’s departure is on their own terms or against their will, you need to remind yourself that their departure is strictly business; therefore, try to keep your emotions in check even though a good friend may be leaving the company.  As a reminder, collect the company’s property, deactivate all passwords, and debrief the departing employee.  These steps will ensure that your business goes through a seamless transition when employees leave, without any serious hiccups, significant loss or damage.

NOTE: Any advice contained in this material is not intended or written to be legal or tax advice, and cannot be relied upon as such, nor can it be used for the purpose of avoiding tax penalties that may be imposed by the IRS or any state(s).

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