Navigating Employee Offboarding: A Comprehensive Guide with PeopleHCM

Employee offboarding isn't just a way to say goodbye. It is also a chance to ensure that employees leave on a positive note while protecting your company's knowledge and helping to maintain a positive reputation.

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Offboarding and the related paperwork can be overwhelming. A robust offboarding software like PeopleHCM can help you create a well-structured and effective offboarding process.

We've compiled this helpful guide to support you and your company through this complex transition. It will simplify the process of offboarding employees, no matter their level.

Specifically, our guide will walk you through each step and how best to:

• Acknowledge a resignation or communicate a termination decision and indicate clear next steps.
• Ask the right questions in an exit interview.
• Determine the best style of exit interview.
• Offer support after a death in the workplace.
• Pay the family of a deceased employee.
• Provide employees with specific feedback when they are underperforming, with the goal  of avoiding termination altogether.
• Tie up any other loose ends before an employee leaves.

Ready? Let’s get started.

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Offboarding Resigning Employees

Resigning Employees Offboarding Checklist

Use this checklist as a starting point to help ensure you handle a resigning employee's paperwork and logistics properly.

1. Manage initial steps for an employee resignation

• Formal resignation acceptance:
  • Collect all applicable documents relating to the employment relationship, including (if applicable):
  • Offer letters and employment agreements.
  • Determine compensation owed to the resigning employee.
  • Gather any immigration documents to determine any impact on employment status.

• Debrief the employee on remaining benefits, such as:
  • Ensure any notice required by COBRA (Consolidated Omnibus Budget Reconciliation Act)  is provided to the departing employee.
  • Retirement and/or life insurance plans.
  • Paid time off balances.

• Determine where/when the last paycheck will be sent, or hand the employee their last paycheck in person (by applicable law).
• Provide the employee with additional documentation, where required by state or local law of the United States.
• Notify managers and team members as appropriate, preferably in person.
• Notify necessary customers or other businesses, as applicable.

2. Transition the work

• Onboard the employee’s replacement or, in the interim, determine who will assume the resigning employee’s responsibilities.
• Have the departing employee write up outstanding job details and duties, including:
  • Ongoing tasks.
  • Current and upcoming projects and deadlines.
  • Necessary contact information.  

3. Conduct an exit interview

• Inform the employee that the exit interview is optional.
• Conduct the interview online or in person during the departing employee’s last week.

4. Manage remaining logistics

• Ensure contact information for the departing employee is up to date for future post-termination communication.
• Consult your business' policy to determine how to respond to requests for employment references.
• Return IT hardware and any company-owned devices.
• Regain possession of all confidential documents, manuals, data records, and other proprietary information.
• Return all company property.
• Remove and transfer administrative access:
  • Access badge/ID card
  • Company software
  • Company social media pages
  • VPN and remote document storage
  • Company communication systems

• Remove from company directory and organizational charts.

Exit Interview Best Practices  

Have your exit interview process ironed out.

An effective exit interview helps increase clarity and understanding after the employee moves on. Consider taking this opportunity to understand management style, processes, and employee morale.

Different exit interview styles suit different businesses. Some find it helpful to make the interview open-ended, while others find a structured interview more useful. In either case, reassuring the employees that the information they provide will remain confidential to the extent possible may help put them at ease. Reflect on who might best conduct the interview.

• Although in-person interviews offer the best communication process for getting direct feedback, you may also consider offering anonymous exit interviews via an online survey.
• Consider whether any of the feedback provided requires immediate attention.
• Create an internal database to store all the data, which will help you paint a clearer picture of organizational strengths and areas of weakness.

Terminating Laying Off Employees

Involuntary Terminations & Layoffs: Offboarding Checklist

1. Manage initial steps for an employee resignation.

• Ensure all termination decisions are made according to applicable company policies and practices.
• Consult an attorney on applicable laws in your state and best practices for handling involuntary terminations.
• Collect all documents relating to the employment relationship, including (if applicable):
  • Offer letters and employment agreements (or any other agreement)
  • Compensation plans to determine what non-salary or non-hourly pay may be owed to the terminated employee.
  • Immigration documents (if any) to understand the impact on status upon termination .

2. Notify the employee

• Create a strategy for delivering the news.
• Inform the employee in person, remaining clear and concise.
• Send a formal termination letter confirming the termination date and benefits end date(s).
• Debrief the employee on remaining benefits, such as:
  • Consolidated Omnibus Budget Reconciliation Act (COBRA)
  • Retirement and life insurance plans and any other benefits
  • Any outstanding bonuses

• Determine where/when the last paycheck will be sent, or hand the employee their last paycheck in person (by applicable laws).
• Provide the employee with additional documentation, where required by state or local law.
• Notify managers and team members as appropriate, preferably in person.
• Notify necessary customers, vendors, and businesses, as applicable.

3. Transition the work

• Determine who will assume the terminated employee’s responsibilities.
• Onboard the replacement personnel.

4. Manage remaining logistics

• Ensure contact information for the departing employee is up to date for future post-termination communication needs.
• Consult your business’ policy to determine how to respond to requests for employment references.
• Return IT hardware and any company-owned devices.
• Regain possession of all confidential documents, manuals, IPO, data records, and other proprietary information.
• Return all company property.
• Process appropriate paperwork for the termination in your payroll system for compensation and benefits.
• Remove and transfer administrative access.
• Remove from company directory and organizational charts.

Terminating an Employee

Execute your involuntary termination with confidence and tact.

Now that you've made the difficult decision to let someone go, it's necessary to plan and develop an established protocol.

“At-will” Employment:  All employment relationships are presumed to be "at-will" in all U.S. states except Montana. However, other employment laws may limit this presumption.

Proactive Management: Employers can often avoid an eventual involuntary termination by adopting clear and consistently applied policies and practices regarding how managers are expected to manage performance.

Avoiding Messy Terminations: Employers can help avoid messy terminations by proactively addressing performance and behavioral issues. However, when these measures don't result in the requisite improvements, the best thing an employer can do is be decisive and proactive in its decision.

Managing Risk Associated with Involuntary Terminations

To some extent, involuntary terminations can never be entirely risk-free. There is always a possibility that a terminated employee may feel they have been mistreated and allege wrongful termination in violation of the law.

However, there are some best practices you can follow to minimize claims of wrongful discharge:

• Develop and consistently apply applicable workplace policies.
• Train your company managers, supervisors, and other decision-makers on their responsibilities under these policies promptly, and impartially investigate allegations or reports of violation of company policy.
• Ensure no termination decisions are made in retaliation for legally protected activity, such as filing a discrimination claim.
• Discuss with counsel whether to seek a release of claims in return for separation pay or other benefits.

Best Practices for Terminating an Employee

Planning a successful employee termination

• Avoid making It a surprise.
• Consider jotting down your talking points to conduct the conversation without unnecessarily prolonging the process.
• Demonstrate compassion, professionalism, and discretion when terminating an employee, regardless of why the employee is leaving.
• Always strive to keep clear documentation throughout this process.

Handling a Death in the Workplace

Advice on Providing Workplace Support

Handling the death of an employee is a sensitive matter as well as emotional challenge for everyone. Business must continue, but being sensitive and thoughtful is essential. Here are several actions you can take to help employees grieve and keep the necessary wheels turning in place to keep the business going.

• Inform employees in a manner that best suits your company.  
• Do your best to communicate with the deceased employee's team members to determine what must be handled immediately.
• Allow Employees Space to Process in the way that is most healthy for them.
• Offer Grief Counseling to employees.
• Respect a family's privacy while keeping open communication as you handle required paperwork and other loose ends.
• Find Ways to honor the Employee's Memory.
• Have a process in place to handle the necessary logistics and offer support to employees.

Handling A Deceased Employee's Paychecks

Deceased Employees: Offboarding Checklist

When an employee passes away, paperwork and logistics may get complicated. This checklist provides a starting point to ensure you correctly handle the employee's remaining paychecks, benefits, and other assets.

1. If there is a personal representative or beneficiary

• Consult state laws to determine which individuals may be paid and how.
• Have them complete Form W-9  to obtain the deceased employee's Social Security Number.
• If applicable, reissue the net amount of any uncashed paychecks payable to the beneficiary or representative.

2. If there is no personal representative or beneficiary

• Wait for the probate court to issue a tax identification number (EIN ) for the employee’s estate.
• Reissue the net amount of any uncashed paychecks payable to the employee’s estate.

3. Handle Necessary Paperwork

• Obtain the necessary death certificates to be used for life insurance, pension, and applicable workers’ compensation death benefits.
• End health insurance, according to your company’s policy.
• Determine the Health Savings Account (HSA)  balance before the date of death and notify the personal representative or beneficiary of the procedure.
• Withhold Social Security and Medicare taxes and state employment taxes from the employees' unpaid wages, if applicable.
• Deposit taxes and the employer's share.
• Include wages on Form 940, the Employer's Annual Federal unemployment (FUTA)  Tax Return.
• Report accrued wages and federal employment taxes on Form W-2  
• Complete COBRA paperwork for dependents.

As you can see, a structured offboarding process benefits both your organization and the departing employee. It can also help prevent compliance and legal issues that may arise after termination. And PeopleHCM’s robust hr offboarding software can help you with that!

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