Employee OffBoarding Checklist: 7 Simple Steps

An employee offboarding checklist is a handy tool to have as a small business owner. Workers in your company will leave, either voluntarily or involuntarily. With an employee offboarding checklist–sometimes called a “termination checklist”–you won’t skip any part of the process when it comes to managing your employee’s exit. These steps ensure the integrity of your employment brand as you work in a professional manner to each departing employee.

What Is Employee Offboarding?

Employee off boarding happens when a staff member leaves your company. The process minimizes security risks. Having an employee offboarding checklist creates a seamless transition for the leaving employee and the team still under your employment. There are 7 simple steps to follow with the employee offboarding process. 

Seven Steps To Follow On Your Employee Offboarding Checklist

For anyone in charge of human resources at your small business it is essential to know all 7 steps of the employee onboarding checklist. This involves document termination, delegating tasks, customizing your company’s process, communicating to relevant parties, conducting an exit interview, providing a final paycheck, and retaining all employee documentation.

Step 1: Document Termination

The first part of the employee offboarding checklist is to document the termination as thoroughly as possible. How you do it depends on the way in which the worker exits the company. Voluntary resignation or involuntary termination are the most common methods. Both come with different practicalities and legalities required during the offboarding process. Either way, it is important to record the reason and the date of the termination.

Step 2: Delegate Tasks

The next step on your employee off boarding checklist should involve the delegation of tasks. Depending on the size and industry you are in, some common tasks to delegate involve running the employee’s final payroll, communicating with the manager about the employee’s departure, and identifying personnel to take over their duties. 

IT administration should collect all of the outgoing employee’s equipment, manage or disable account access, as well as be the recipient of keys or keycards. Data systems and files get an update and processing in HR. Any partners or vendors receive word from upper management, as well as coming to a decision about any new hiring, promoting, or cross-training to fill the vacant position.

Step 3: Customize Your Employee Offboarding Checklist

Your company’s employee offboarding checklist template should be unique to the organization. It should have a few essential parts, no matter what. Those, at minimum, must include steps that manage employee data, termination information, communications, company property, IT equipment and data, contact information, benefits, leave balances, and legal notices. The final check, including any deductions or expenses, goes to the employee at their exit interview.

Step 4: Communicate to Relevant Parties

If an employee is fired on the spot, asked to give leave, or issued an involuntary employment end date, certain people should be looped into that communication. Quitting, on the other hand, means the exiting employee needs to provide notice and set a date for ending their employment. Letting those who need to be informed of when and why the worker is leaving is an essential step in the employee offboarding checklist.

Step 5: Conduct an Exit Interview

Though not required, a recommended step in the employee offboarding checklist is to conduct an interview with the employee. Businesses gain insights from exit interviews by finding out why their employees are leaving and if there is anything that can be done with current or future employees to increase retention. Issues like workload, pay, benefits, personality issues, or management training can be proactively addressed in an exit interview.

Step 6: Provide Final Paycheck

With the information collected on your employee onboarding checklist you or your HR department should disperse the employee’s final paycheck. This check will include wages for hours worked or hours that will be worked through their last day. Deductions should be taken out, especially for remaining benefits premiums in order to maintain their insurance through the first of the month. Expense reimbursement requests, calculated any PTO, and if any severance should all be included in the final paycheck.

Step 7: Retain Employee Documentation

Requirements vary from state to state on this step in the employee offboarding checklist. As a rule of thumb, all companies need to keep records of terminated employees for a minimum of four years. This protects companies against claims of unfair employment practices, discrimination, or any potential scenarios. Documents to keep on file should include performance reviews, warnings, or behavioral issues in case the exiting employee files a lawsuit against the company.

Why A Structured Employee Offboarding Checklist Is Important

Creating and implementing a structured offboarding process should be a best practice for any small business. It’s equal protection for your company and leadership, as well as for the departing employee. Clear expectations are set. Mistakes are reduced. Chances of a lawsuit are minimized. Everyone on staff–the employee, their manager, their co-workers, the payroll/IT/HR teams–should have clear communication about what is happening with the worker through their last day at your company.

Costs Associated With An Employee Offboarding Checklist

Following your offboarding checklist helps alleviate any unnecessary fees and expenses for the company. The most common costs associated with the employee offboarding process are labor, payroll/bookkeeping, and hidden costs, such as what it takes to replace the worker. Those can add up to be thousands of dollars.

Choosing An Offboarding Provider

If your company is looking for a provider to handle a departing staff member they might come with their own employee offboarding checklist and process. The provider should be in constant contact with the employer and share templates, reminders, and documentation. You can go with an outsourced HR company, professional employer organization (PEO), or various softwares.

Outsourced HR

Having an expert in-house for HR can be costly for a small business. Outsourcing your human resources needed to support you during an employee offboarding can be more effective and less expensive. Going with an online service provider can offer custom pricing and optional add-ons for payroll processing and time tracking as the employee leaves your company.

Professional Employer Organization (PEO)

If you need a co-employer to handle your employee offboarding process, as well as tasks related to HR and payroll then consider a PEO. This is a partner that manages your personnel and staff. PEOs over employee hiring, classification, payment requirements, and for larger organizations, benefit packages.

HRIS Software

Human resource information system (HRIS) software aids in the tracking of new hires and terminations at your company. You still oversee business practices like hiring and firing, which makes them different from PEOs. If you already have a good grasp on state mandated tax laws and workforce compliance then an HRIS software is a smart option to consider for your small business.

Payroll Software

Using a dedicated payroll software for your small business can assist with certain parts of your employee offboarding checklist. Hiring, termination, final paychecks, and required services such as COBRA are all tracked via this technology. Most HR transactional needs can be met with payroll software.

Spreadsheet/Manual Employee Offboarding Checklist

If you are a small business owner and your company has only a few staff members you can manage terminations manually. Keeping track of departed employees on a spreadsheet or creating your own employee offboarding checklist might be good options. Double check the legal requirements you are obligated to follow in your state first before deciding to manually handle offboarding.

Conclusion

There are 7 simple steps to follow on your employee offboarding checklist. Thoroughly reviewing and implementing each one ensures a smooth offboarding process for any worker leaving your company. This road map for departing employees ensures the protection of private information as well as lowering the risk of future legal complications for the company.