Using an Employee Separation Checklist to End Your Relationship with an Employee

Terminating an employee is never fun—nor is saying goodbye to a trusted employee who chooses to leave. There are steps your business should take to protect itself when either of these situations happens. Using an employee separation checklist can help ensure that you take care of all the business that's necessary when a person's employment ends.

Understanding employee separation

Employee separation happens whenever someone who works for you leaves your business. The separation can be voluntary, such as when an employee quits, leaves, or retires. Separation can also be involuntary, such as when you have to let someone go, for poor performance or another reason.

A voluntary separation can take effect immediately, but most often the departing employee offers a notice period, such as two weeks. Depending on the circumstances, involuntary separation is often immediate, with the employee being asked to leave right away.

Your responsibilities when an employee leaves

Your business's responsibilities to your employees should be specified in your employment agreement. This states your full and complete agreement about the employment and includes what your responsibilities are when employment ends.

Be sure to check this agreement when creating your employee separation checklist. If you do not use an employment agreement, you should work with an attorney to create one, to protect both your business and your employees.

Employee separation notice or letter

When an employee leaves, there is a lot of paperwork that you and the employee need to complete. One of the most important is the employee separation notice or employee separation letter, which your company should generate.

This kind of notice is not required for at-will employees (it is required if the employee is under contract or belongs to a union), but it's considered good practice to provide a separation notice for all employees.

Make sure your legal team reviews your template or that you obtain legal advice when preparing it. The separation letter or notice should include the following:

• The name of the company and employee, the date, and date of effective separation
• The reason for the separation
• If the employee is being terminated after warnings, be sure to reference those with specifics
• A calculation of the remaining personal time off (PTO) the employee has and a calculation of the final paycheck amount
• An explanation of how benefits will be handled moving forward
• A requirement that the employee return all company property

Exit interview

In an exit interview, your HR representative sits down with the employee, talks about the circumstances that led to the separation, and gives the employee all the necessary paperwork to close out your relationship together. Whether the separation is voluntary or involuntary, an exit interview is an important step to include. In both situations, it allows you to gain insight into the employee's perspective about their employment situation and your company. HR should have a separation checklist they refer to, ensuring that all relevant steps are taken during the exit interview.

The employee separation checklist

Your separation checklist is a complete list of all the steps your business needs to take when an employee leaves, including those described above. To be sure your employee separation checklist is complete and complies with all laws, you should work with an attorney or other legal professional to prepare it. The list should include:

• An employee separation notice or employee separation letter
• Any applicable state-required notices you need to give your employee
• Details about the severance agreement, if applicable, provided to the employee
• Written notices and releases you are required to give to or obtain from the employee under the Worker Adjustment and Retraining Notification Act (WARN) and the Older Workers Benefit Protection Act (OWBPA)
• A notification to the employee about the status of their benefits and their Consolidated Omnibus Budget Reconciliation Rights Act (COBRA) rights, as well as the status of Flexible Spending Accounts (FSAs) or Health Savings Accounts (HSAs) and any other benefits provided
• A statement of any PTO that has been accrued and how it will be converted to compensation
• Information and options about the employee's existing retirement plans with the company
• Review of the compensation owed the employee and the processing of their final paycheck
• Permission from the employee for your business to respond to future employment verification requests
• Review of noncompete or confidentiality agreements you have in place with the employee
• Return of company property, including computer, phone, uniform, vehicle, keys, ID, tools, etc.
• Removal of employee belongings from the workplace
• Completion of the exit interview
• Notification to your legal department, if the employee has a work visa
• Disablement of the employee's online access, including email and log-ins, as well as telephone voicemail
• Updating of employment files

An employee separation checklist is an important organizational tool to put in place for your business. With this checklist in hand, you can be sure any employee separation situation is handled legally and completely.