Terminating an Employee: An Essential Checklist
Terminating an employee is never easy. But when termination becomes necessary, following a checklist can help ensure you are consistent and following best practices. Employers may wish to consult with legal counsel to mitigate exposure to litigation and ensure compliance with applicable federal, state, and local laws prior to termination. Also consider the following guideline when an employee's termination is imminent.
Note: this checklist is not meant to be all-inclusive; other actions may be necessary depending on which state and industry your business is in.
1. Contact IT
Depending on the circumstances, the first step to take when an employee's termination is imminent is often notifying your IT department or network administrator. Give them a specific date and time to cancel that employee's access to computer and telephone systems. Ask the employee to relinquish their passwords and any other information that involves accessing computer records and telephone messages. Take similar actions where employees have remote access to your company's system.
When applicable, request that the employee's building entry security code or access card be disabled.
2. Document the Process
Place a record of the effective date of termination, as well as all information regarding the reason for the decision, in the employee's file. Include supporting details such as the results of previous performance reviews, warnings, and disciplinary actions.
After termination, give the employee an official termination letter. The letter should include the date of termination and clearly outline their benefits status.
3. Reclaim Company Property
Upon termination, the employee should relinquish all company-issued property — including laptops, tablets, cell phones, ID badges, and keys — as well as any company documents in their possession. If these items are kept at the employee’s home, schedule a time to retrieve them.
4. Schedule a Time to Collect Personal Items
Some businesses prefer to have employees pick up personal items immediately following notice of termination. Others opt for a weekend or after-hours time for them to gather personal belongings.
5. Address Benefits
In situations where the employee is enrolled in a company-sponsored group health insurance program, they may be entitled to continued health insurance coverage in compliance with the Consolidated Omnibus Budget Reconciliation Act (COBRA) or similar state law. Ask your health insurance provider to ensure your company is in compliance with notice requirements to employees.
It's also customary to give departing employees a benefits status letter outlining any relevant information regarding the company's life insurance and retirement plan programs where applicable. Employers in some states are also legally obligated to provide terminated employees with a notice explaining how they can claim unemployment benefits.
6. Include Money Owed in the Final Paycheck
If your company owes any money for unpaid expenses, commissions, or bonuses, this amount should be included in the employee's final paycheck. Terminated employees may also be entitled to payment for accrued-but-unused vacation, personal, and/or sick time. Check state laws for requirements regarding when final paychecks must be issued.
7. Ask for Current Contact Information
It may be necessary to correspond with a former employee in the future (for example, to send a Form W-2 at year-end). Upon termination, make sure you have updated contact information and ask them to alert you if their residence changes in the near-term.
8. Alert Staff and Customers to the Employee's Departure
In cases where the employee has worked closely with certain staff or customers, let them know this individual has left the company. Reassure staff and customers that business will continue to proceed smoothly in the transition period and let them know who will assume the employee’s responsibilities. However, you should refrain from sharing the reason behind the termination.