What to Do When an Employee Leaves

Employees quit. It is a reality of every business. Large companies with dedicated human resource teams have a process or checklist they follow when someone leaves. But small and mid-sized firms may not have procedures in place.

What follows are important tasks to address when an employee decides to move on.

Employees quit. It is a reality of every business.

Legal Obligations

The highest priority is to fulfill your business’s legal obligations to the employee. Your company should pay the final salary, obligations, and outstanding reimbursements.

For example, under United States federal law, an employee who quits voluntarily must receive her final paycheck on the next scheduled payday. Other jurisdictions may have different requirements.

In California, businesses have 72 hours to deliver a final paycheck when an employee quits.

In Idaho, the final paycheck must come within 10 days or on the next scheduled payday, whichever comes first. But if an employee in Idaho submits a written request for earlier payment, the employer must comply within 48 hours.

And in Oregon, businesses must pay departing employees immediately if the employee provided at least a 48-hour notice.

Given these differences, it is important to know what is required for your business when an employee leaves.

In addition to providing a final paycheck in a timely way, a business may also be required to pay any outstanding reimbursements, including unused vacation pay, sick leave, or expenses.

And a company may need to provide notifications. For example, the employer is likely to be responsible for health and retirement benefit notifications. Failing to provide information about COBRA (Consolidated Omnibus Budget Reconciliation Act), for example, could expose your business to liability in some jurisdictions.

Resignation Letter

When an employee leaves voluntarily, collect a letter of resignation. This may seem unnecessary. Your trusted employee met with you and explained why he’d decided to move on. You shook hands and wished him well. Why do you need a resignation letter, too?

Even a good exit process has requirements.

The answer is proof. Although you may never need it, a signed letter of resignation is evidence that the employee left of his own accord. If at some point the employee tried to collect unemployment and claimed he was fired, you could use the letter to help make your case.

Projects and Responsibilities

The transfer of projects and responsibilities is crucial for small and mid-sized businesses.

If sufficient notice is given, it can be helpful to have the departing employee provide a list of tasks or even a series of how-to videos explaining important or recurring duties.

It may even be worthwhile to pay the outgoing employee as a consultant for a while to ensure projects are completed.

Passwords

Hopefully, your business uses a good password manager such as LastPass, for example. These tools allow you to place all of a departing employee’s work-related passwords into a group and transfer them with ease to a supervisor or another employee.

Once the passwords have been shared, it is a fairly simple process to log in to each account — e.g., SEMrush, Ahrefs, an ecommerce backend, Bing Ads — and change the password or the user name.

While the person leaving may have been a trusted employee, make certain that she can no longer access your business’s software and accounts after she leaves.

Payment Cards

Cancel all payment cards or similar if the employee had access. Even if you believe the ex-employee would not use the card or the number intentionally, she might toss the card in the trash or in some other way compromise the number. To be safe, cancel it.

Company Property

Collect all company-owned items from the employee before he leaves. The computer the employee used is the most obvious item. Did he also have a mobile phone? How about a microphone for recording podcasts or a camera for taking product photos?

Confidentiality

Remind the departing employee of his responsibilities regarding confidentiality. (Your company should probably require confidentiality agreements when you hire.)

If you have those agreements in place, mention this when an employee leaves. For example, if your ecommerce business developed a proprietary way to improve the performance of pay-per-click ads, you would not want the departing employee to share the concept with a competitor.