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Terminating an Employee: Employee Separation Best Practices

Human Resources

Whether employees leave voluntarily or lose their jobs, parting ways with your workforce can be difficult. Learn what both you and the employee will need to know and have upon the termination as part of a proper employee termination procedure.

What to Get from the Employee

There are several things that you will need to obtain from the employee before termination. First, make sure all office property is returned, such as cell phones, laptops, or access cards. Next, if an employee has resigned, you will need to obtain proper documentation such as a letter of resignation to serve as official proof of departure. You will also want to conduct an exit interview with the terminated employee; this can help the company understand how to improve operations and it may serve as documentation if faced with future accusations against your business.

What to Give to the Employee

There are several important documents and pieces of information that a terminated employee must be given before he or she leaves the workplace. Check your state laws to make sure you cover all of them, but there are some that apply for every state. First, you’ll want to calculate the employee’s final payroll amount and communicate to him or her how much money to expect upon receiving the final paycheck. This includes calculating vacation, sick, and any other accrued time, depending on company policy and state law.

For an employee eligible for COBRA coverage, the HIPAA Certificate of Coverage (COC) must be provided no later than the COBRA election notice (44 days). If the employee is not eligible for COBRA, the COC must be provided within a reasonable time after coverage ends. Depending on company policy, terminated employees may be offered severance pay, which may be given in exchange for signing a waiver to relinquish their right to bring certain types of legal claims against their former employer.

What to Know Down the Road 

The process of terminating an employee rarely ends at your last face-to-face meeting. There are some situations that you may have to deal with sometimes long after the departure. If an employee files for unemployment, you may need to supply a separation document, depending on the state. If so, check with your local unemployment office to make sure you cover all of your state’s requirements. There’s also a possibility that your former employee will ask you for a reference when applying for new job opportunities. If so, make sure you know who the proper manager or supervisor is to handle reference requests, and direct the former employee accordingly.

Employers should always consider best practices when it comes to employee separation.  To learn more about terminating an employee and other critical areas for small business owners, download this free whitepaper on better employee management.


This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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