What you need to know when terminating an employee

7 steps to take before an employee no longer works for you

Whether an employee leaves your company amicably on his or her own terms or after being fired, there are a number of steps businesses should take to ensure their security.

Whether an employee leaves your company amicably on his or her own terms or after being fired, there are a number of steps businesses should take to ensure their security and, in the end, their prosperity. The departure of an employee is far more critical a moment than when one first joins your team, because a new employee knows nothing about your operation. Conversely, departing employees have cultivated and retained a great deal of knowledge about your business, your competitors, your finances and, most importantly, your client list.

Even if it is an amicable separation, you need to read this...

Even if the departing employee has performed admirably and has shown no signs of hostility during employment, there is no way of knowing for sure how the person will react when it comes time to part ways. To help your company stay safe, we have consolidated 7 key steps to take when an employee departs. Try not to look at these steps as measures to take for problem employees, but rather as a standard set of rules to follow regardless of who the departing employee is and what kind of employment record he or she had with your business.

Issue a final paycheck

All departing employees must be issued a final paycheck, but when they must receive it depends on your state's laws. In some states, an employee's final paycheck must be issued on the last day of work; in other states, the final paycheck may still follow the usual payroll cycle. There is also the matter of accrued unused vacation time, which may need to be included in the final paycheck. After payroll has cut the employee's final paycheck, have the accounting clerk remove the person's name from your payroll files.

Collect company property

Do not let departing employees walk out of the door for the last time while still in possession of a company car, keys, security cards, company credit cards, computers, cell phones, company manuals or any confidential material. While this may seem obvious, it is very easy to forget these items when you trust certain employees.

Cancel credit and phone cards

In addition to collecting company credit cards and phone cards, as mentioned above, you should also cancel them. An employee could have easily copied down the cards' information for personal use, and since there is no way of knowing whether this was done, the best course of action is to cancel those cards.

Deactivate logins and passcodes

An employee's departure is always a matter of security, and one of the chief security concerns is access -- access to the building, access to your technology network, etc. Be sure to disable any personal passwords or entry codes to the building, especially if you use a biometric system. Remove any lingering profiles an employee may have on the network and institute a company-wide password change to anything with a generic login.

Address Confidentiality Policies

This coincides with the collection of company property. Since you cannot take back something intangible like knowledge, it is important that you debrief departing employees. Review any non-disclosure agreements and/or non-compete clauses that you may have arranged with your employees. It is crucial that you make clear their obligations to adhere to those arrangements. We also suggest that you give them a copy of the agreement for future reference.

Decide who will handle projects

To make certain that your employee's departure does not affect the company's day-to-day productivity, create a plan that distributes his or her responsibilities among other employees. Also, have the departing employee personally brief these employees, but be cautious about this; it can sometimes be caustic if the person is not leaving on good terms. Make sure that you start this process early in order to give everyone involved enough time to get coordinated on picking up the extra work.

Assign a point of contact

Even though an employee is leaving, he or she may still need to communicate with your company for several weeks, especially regarding references. Give the person a point of contact within the company from whom to solicit needed information.

Executive summary

Whether your employee's departure is voluntary or not, you need to remind yourself that the departure is strictly business. Try to keep your emotions in check even though a good friend may be leaving the company. As a reminder, collect the company's property, deactivate all passwords, and debrief the departing employee. These steps will help ensure that your business goes through a seamless transition when employees leave, without any serious hiccups, significant loss or damage incurred.

For more information about how to manage employees leaving your company, contact Carrie Cox via email, or Cindy McSwain using her information below.

Cindy McSwain

Senior Vice President
Outsourcing Services

Cindy McSwain leads AGH’s outsourcing services group. Her team provides payroll, accounting, funds disbursement, controller, and other financial outsourcing services to numerous clients throughout the U.S. Prior to joining the outsourcing group, Cindy served AGH’s audit clients for 10 years, working with a wide range of middle-market, closely held and family-owned organizations.

Her current clients cross many industry sectors, including manufacturing and distribution, restaurants, retailers, medical and not-for-profit. She has participated in numerous SEC filings and public registrations and has experience in mergers and acquisitions. Cindy is a certified public accountant and a member of both the American Institute of Certified Public Accountants and the Kansas Society of Certified Public Accountants.

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