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7 Things to Include on Your Termination Checklist

24 January
by Miles Charles
6 minute read

It is inevitable that as a company you will be required to terminate employees at one point or another for varying reasons. Terminating an employee(s) is an intricate process that necessitates the use of a well-designed termination checklist to guide the process.

Termination Checklist

A termination checklist is an outline, master list if you wish, that lists what needs to be done at what stage when an employee is leaving your employ. Such a checklist is important as following it allows for a smooth transition for your company and the employee in question, and it also protects the company in case of a lawsuit.

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According to Forbes, one of the most important things to do when terminating employees is careful, step-by-step organization of the termination process. Failure to do so this might not only ruin your brand but also expose the company to legal liabilities. This can be avoided by making use of a resignation checklist for the employee.

Types of Employee Termination

There are two main types of terminations that you might be dealing with as a company. Let's take a look at them:

Voluntary termination

This is where an employee decides to leave the company on his own accord and issues a resignation letter to that effect. The reasons for this action may vary. The employee could be moving on to greener pastures, going back to school, taking time off to travel or raise a family, starting their own business, etc.

Upon deciding to leave for any of these reasons the employee then hands in a resignation letter within the confines of the required legal timelines.

Involuntary termination

This happens when the employer initiates the termination for organizational reasons such as redundancy of the position, restructuring or downsizing. Often, involuntary termination might be as a result of termination for cause- occasioned by instances such as gross misconduct by the employee, violation of company policy, poor performance, theft of company property, insubordination, and such related matters.

For it to come down to termination on the basis of these reasons, as an employer, you will likely have tried to mitigate the situation by mediation or issuing warnings to the employee. If things do not change the situation might inevitably end up in termination.

Termination Checklist

Depending on the type of termination some companies might have a voluntary and involuntary termination checklist with different items, but most termination checklists will have the same general points as discussed below.

7 Items That Should Define Any Termination Checklist

Here's generally what should be included in your checklist: 

Receive resignation letter: In the employee resignation letter (also referred as employee exit letter), the employee must state their wish to leave the company, the reason for leaving and most importantly the date of leaving. Once an employee decides to surrender their position, always inform them to write a resignation letter and provide the appropriate notice as required by the law or company’s policy.

Inform the HR department to start the termination process: After receiving a resignation letter from an employee, inform the human resource department so that they can open a file related to the termination in question.

The file should have an employee termination checklist form to be followed and basic details of the employee such as name, department, position as well as important details such as the reason for termination, last day of work and the name of the person handling their file. Any paperwork coming from other departments about the termination should be kept in this file.

Inform the IT department to cut off access: Inform the IT department or network administrator of the timeline by which he needs to cut off the leaving employee’s access to the systems.

Another important thing is to reroute his/ her emails to another account to ensure continuity of business or projects that the leaving employee might have been dealing with. This goes hand in hand with disabling the leaving employee’s access to the building or taking back their keys or key card, either immediately or at a mutually agreed time.

Return of company property: The return of company property upon resignation is an important step in this process. The employee should then be asked to give back all the company property he/she might be holding. This includes items such as laptops/ tablets, phones, credit cards, company files, or company information, e.g., manuals, formulas, etc., company car and any other relevant items.

Termination Checklist

Any passwords that the employee was using need to be retrieved and changed. Some companies may have an employee resignation handover checklist that is followed at this juncture to assure proper hand over of projects, clients, and property.

Calculate employee benefits: This is an important step in the termination process. Advise the employee on the status of their benefits including health insurance, life insurance, severance pay, final paycheck, etc., as outlined in company policy or as required by law.

If the employee has accrued but unused vacation days plan to include it in the final paycheck. Confirm if the employee is owed any money such as bonuses, company expenses that he paid for or in commissions and plan to include them in his final paycheck. On the other hand, if the employee owes the company any advances from payroll this should be subtracted from the final paycheck.

Sign confidentiality agreements: A confidentiality agreement is a legal agreement between an employer and employee that binds the employee from disclosing any confidential company information, usually signed at employment.

During termination, there is a need to revisit the agreement to ensure that the employee understands what is expected of him/her in relation to disclosing company information, trade secrets, client information, company’s strategic plans, etc. after he/she has left the company.

Termination Checklist

Conduct an exit interview: The exit interview is a good chance for the company to learn a few things from the employee. Here, the employee should be asked about the reasons for leaving the company, what attracted him/her most to the job in the first place, how he/she got along with his/her manager and colleagues, what he/she liked or disliked about his/her job, etc.

In “Making Exit Interviews Count’ the Harvard Business Review found that a thoughtful exit interview can give great insights on why employees stay, why they leave, and how a company needs to change to be better.

Termination Checklist: Final Say

During the exit interview, the employee should fill out a forwarding address form if they plan to move from the area or go overseas to facilitate any further communication from the company. Finally, during the exit interview, the employee should sign a form allowing the company to provide reference information to any future companies that he may apply jobs to, who might request for references.

For employers, dealing with corporate downsize or employee termination can be a very unpleasant process, and it can be challenging to determine how to handle the process correctly. Make sure you have a policy on paper before you need one. 

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