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Resource Center / Acquisition & Retention

Employee Termination and Resignation: Know How to Set the Right Tone

Termination of employment and resignations can be a painful process. Here’s how to keep your team’s trust throughout.

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Kris Hoppe
Sep 30, 20164 minutes

When an employee leaves your company, do you have a process in place?

Building a thoughtful process around employees leaving — whether they’re terminated, laid off, or leaving on their own accord — will have a net positive effect on your company for myriad reasons.

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Having a protocol and best practices in place for employees who leave will build trust among existing employees. And according to SHRM, 55% of employees cited trust between employees and senior management as very important to job satisfaction. It will also be more likely to protect your company from unwanted lawsuits, and set the tone for future hiring and termination practices.

Here’s how to set the right tone when an employee leaves, and how to build out that trust for the rest of the company.

Psst...we wrote a comprehensive guide on offboarding employees, complete with exit interview questions and letter templates. You can download it for free here.

Read Up On Employee Termination Laws

Before you lay off or terminate an employee, have a solid understanding of both federal and state termination laws. By doing so, you may help reduce the risk of aggrieved employees who seek out wrongful termination lawsuits.

For example, according to the Department of Labor, Equal Employment Opportunity Laws prohibit “specific types of workplace discrimination...in most workplaces on the basis of age, race, color, religion, sex, ethnic/national origin, disability, and veteran status.”

Additionally, some employees have the right to continue their healthcare coverage through COBRA or HIPAA. Certain employees may also have the right to unemployment compensation through state or federal benefits programs.

Because the nuances of termination laws can be complex, it is best to seek legal counsel to gain a full knowledge of relevant state and federal termination laws in relation to your business. By doing so, you’ll both protect your business and do right by your former employees.

Draft an Employee Termination Letter

It’s best practice to send a written termination letter both for the records of you and your employees. As an employer, it’s something you can use in reference at a later date if unexpected complications arise.

A well-written termination letter is cordial and informative, so that your employee knows who to talk to when tying up loose ends. That letter may include information on paychecks, accrued vacation, medical and dental, or COBRA coverage.

Of course, the termination letter you write for employees will vary widely on many factors, including:

  • State employment and unemployment laws - Existing benefits offered to employees - Contractual employment agreements

You can use the below templates as an employee termination letter or acceptance of a resignation letter. Be sure to check with legal counsel to ensure your termination letter meets all applicable laws.

Tips for Informing an Employee Termination

The way you terminate an employee sets precedent for the rest of the company — it indicates to your remaining employees your level of tact, compassion, and professionalism.

That’s why terminating an employee in the right way is important for company morale. How can you do this? Practicing what you’ll say and doing so in a private space are just one of many ways to keep the termination process smooth.

We’ve rounded up several articles with more tips on ensuring a smooth transition.

Reassess Past Decisions

Do you get feedback from employees who are leaving? Although it can be hard to hear, they may also give you valuable insight into better ways to run the company that will keep the rest of your employees happy.

If you’ve had more people leave your company than desired over the past few months, it’s never too late to re-evaluate your tactics. Do your employees feel appreciated? Do you offer a competitive benefits package?

The articles below will help you set up a framework for vital exit interview questions as well as tactics to keep your valuable employees around for longer.

Look to the Future

Running a business is hard work, and employees will inevitably come and go. However, learning how to approach those ebbs and flows with the bigger picture in mind will help you get through the rough patches.

Justworks and PivotDesk created a series called Fearless Confessions that addresses the tough parts of running a business, and one of them is themed around hiring and firing team members. You can check out some wisdom from other business leaders who have been there here:

In the end, your remaining employees will appreciate your thoughtful approach to building a quality team if you make the hiring and termination process open and transparent.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.