Between recruiting, training, and getting a new team member up to speed, losing an employee can cost thousands in productivity while putting added strain on the rest of your workforce. As a result, many companies are tempted to cut ties quickly and move on when working relationships come to an end.
However, this approach can quickly backfire. Not only can a poorly handled employee offboarding process leave you exposed to security risks, knowledge gaps, and a damaged employer brand, but it can also lead to serious compliance issues.
That’s why a deliberate, thorough offboarding process is essential. But what exactly does one look like? What are the main factors you need to consider for a smooth transition?
In this guide, we will give you a complete run through of the best practices when an employee exits your company. From navigating employment laws to recovering assets and conducting insightful exit interviews, we’ll cover the seven critical steps to ensure your offboarding is handled professionally (and consistently).
The reason for an employee's departure will impact how that exit is handled. Whether someone was terminated, resigned voluntarily, or simply retired after decades of service, each of these departures come with different nuances that must be addressed appropriately.
If an employee unfortunately needs to be let go, extra caution should be exercised. HR teams should make sure the reasons comply with laws and regulations to avoid issues in the future. Acting swiftly yet properly here is crucial.
The US predominantly follows "at-will" employment laws, meaning hiring and firing decisions remain at the employer's discretion. In most cases, this means terminations can happen more quickly.
However, most other OECD countries provide more extensive job protections, such as requiring employers to provide cause for termination, longer notice periods, and mandated severance pay, which may necessitate more involved offboarding procedures.
Navigating these laws becomes significantly more challenging when hiring employees across different country borders (more on how to overcome this in the next section).
Voluntary terminations are typically much more straightforward. Most of the time, this allows HR teams to implement an offboarding process that ensures a smooth transition for departing employees while uncovering key insights that could help improve retention efforts.
With that said, there are still legal nuances that need to be taken into account with voluntary resignations, depending on the countries in which you operate.
In France, for example, mutual termination agreements (rupture conventionnelle) require employers and employees to mutually consent to ending the work contract. The process involves preliminary discussions to negotiate terms, followed by both parties signing a detailed agreement on conditions like date and severance amount.
Each party then has a 15-day window to withdraw consent before the agreement is submitted to the French labour administration (DIRECCTE) for approval. Perhaps most interestingly, no reason needs to be given for the termination of the contract. Yet, if HR teams do not follow this process correctly, it could result in compensatory damages being awarded to the employee.
While this is a popular method in France, it’s important to note that employees can still resign by providing notice in the typical way.
When an employee is retiring, it presents a prime opportunity to celebrate their contributions and ensure their knowledge is properly handed over. Retirements generally come with more notice than resignations or terminations, allowing the HR team to put a smooth transition plan in place.
As an Employer of Record (EOR), we know firsthand that even when hiring in a single country, staying current on the latest regulations can be challenging. When managing an international team across multiple countries, that complexity increases exponentially.
Yet, despite these challenges, HR and Legal teams must keep up to date with local employment laws in order to remain compliant. Each country has specific laws on various aspects of termination, including:
Non-compliance has serious consequences - legal disputes, fines, reputational damage. Doing homework on correct, country-specific termination procedures is essential.
To give an example, in the UK, there are several potentially fair reasons for a dismissal. These include the employee not having the capability to do their job, improper conduct, redundancy, or anything that may prevent them from being legally able to work. Dismissing an employee for any reason outside of this framework will likely be considered unfair and can leave the employer vulnerable to legal action
If you are terminating an employee due to work performance, you also need to be able to prove that you have taken steps to notify and attempt to improve any productivity issues. This is normally done through formal performance improvement plans (PIPs) with clear objectives and timelines. There also needs to be at least two formal warnings before dismissal (unless in probation period). The process usually takes place over several months to allow time for improvement.
HR and Legal teams need to keep informed with local employment laws across all the countries where your company has employees. To help guide you with this, we have end of employment sections on each of our country guides. Be sure to check them out if you’re looking for more information on how to compliantly handle employment in a specific location.
When offboarding employees, it creates a shift in team dynamics, workload, and institutional knowledge. That’s why it’s crucial to intentionally communicate the departure to all the relevant parties that may be impacted by the change.
Whether it comes from management or HR, there are a few key groups that need to be informed of departures:
Set up an in-person meeting or video call to communicate next steps around the transition period. Be transparent on practicalities like last day, handovers, and return of company property, including company equipment such as laptops and badges. Show appreciation for their contributions and, if appropriate, leave the door open for future opportunities to connect.
Hold an in-person team meeting, live video call, or send an email/internal message to share the news, depending on what works best for your team culture. It’s not always necessary to explicitly state reasons for leaving, but reaffirm commitments to minimising disruption during this time. Share who will be taking over departing employee's responsibilities and emphasise that leadership and HR is there to support the team.
Important business contacts that worked closely with the departing employee should be told directly over an individual phone call or video meeting. Offer introduction to new points of contact when relevant. Reassure of continuity in meeting partnership objectives going forward.
When an employee resigns, their workload doesn’t simply disappear. A well-structured transition plan is vital for completing the employee lifecycle, ensuring that responsibilities are properly handed off and that everyone understands what needs to happen for a smooth offboarding process to take place.
The goal is making sure as much of their unique knowledge and skills stay with the company as possible. In most cases, the immediate team manager will be the one responsible for drafting and actioning the transition plan, including:
When an employee leaves, one of the most important offboarding steps is making sure the employee no longer has access to internal systems while recovering any company property in their possession. Creating an employee offboarding checklist for all of these items/systems is helpful for documenting and recovering everything needed for security purposes. This applies whether they worked in-office or remotely.
On the topic of remote employees, managers and IT teams need to arrange shipping of items like laptops, phones, proprietary software devices, and any other company assets provided. Have the employee backup and remove any personal data from devices before returning them.
Equally important is revoking access to software, servers, databases, intranet sites, cloud platforms, or other technology systems the employee used for their job. This includes collaboration tools like Slack or Microsoft Teams, project management systems, CRM software, VPN access, etc. Terminate all active credentials and permissions.
The unfortunate reality of neglectign this process is that 20% of companies have experienced security breaches linked to former employees. And 76% of IT leaders strongly agree that offboarding poses a major security threat if not handled properly. This can lead to data leaks, intellectual property theft, and compliance issues.
In regulated industries like healthcare and financial services, strict offboarding procedures are a must to avoid violations. But in reality, all organisations can benefit from securing data, maintaining privacy standards, preserving trade secrets, and protecting the overall integrity of the system when employees leave the workforce.
An employee exit interview is an often overlooked part of the offboarding process, with research showing that only 4.4% of employers conduct them with departing staff. This represents a huge missed opportunity.
Sit down with the employee during their last days to uncover their honest thoughts on their experience at your company. Ask why they’re leaving, what things they liked and didn’t like, if they faced any roadblocks to productivity, and how leadership can improve company culture going forward.
Make as much space as possible for open and honest feedback, as this is your best chance to hear how an employee truly feels. Maintain a judgement-free tone so they feel comfortable opening up about both positives and negatives.
The goal is to gather these valuable insights so you can reduce future turnover, boost engagement among remaining employees, and continuously refine operations. No matter how large your company or how successful, there is always room for improvement.
You might be surprised what comes out of these conversations when people can speak freely without fear of reprisal. Long-tenured employees especially have institutional knowledge that could prove valuable for new hires and management to understand.
The last step in the offboarding process covers all the financial and administrative pieces of the employee’s exit. This includes ensuring they receive their final pay checks and payments for accrued time off or benefits. Not compensating employees for what they’re legally due can result in more compliance issues and may affect their willingness to return as future employees.
With this in mind, Finance and Payroll teams must process the employee’s final pay accurately and promptly based on all local employment laws. This may include commissions, bonuses, pension contributions, and unused holiday payouts.
HR teams may also need to provide a range of documents to the departing employee, such as confirming the employee’s work tenure and references. This differs per country.
Depending on the role the former employee held and the nature of your business operations, you may need to sign off on legal forms like non-disclosure contracts prohibiting the sharing of confidential company information. There are also non-compete agreements to protect proprietary information and intellectual property now that this person is no longer working for you.
The overall goal is wrapping up all financial obligations, safeguarding the company through binding contracts, closing the books on their payroll profile, and compiling detailed employment records in case you need to produce a reference letter later.
Leaving these administrative tasks undone creates loose ends that could ultimately leave you exposed.
As an Employer of Record, we understand how much of a challenging process employee offboarding can be, especially if you are expanding abroad or employing people in multiple countries.
That's why we have local HR experts and legal teams specialised in employment legislation across the countries we serve. When your employee exits, we handle all the compliance paperwork, final payroll, benefits disbursements, and admin support on your behalf.
This means you can focus on the more operational elements like knowledge transfers, exit interviews, and internal team communications. In the background, we’ll ensure the employee's tenure wraps up above board, legally and financially.
Reach out to learn more how we enable customers to operate overseas without the typical employer risks or regulatory headaches.