Do you have a policy in place for what happens after an employee’s job ends? Depending on where you live, there may be special legal requirements about providing unemployment notices, termination letters, and final paychecks. Other than improving your compliance, these HR measures matter because they ensure you have a consistent process for all of your employees. 

Do You Consistently Follow a Written Policy for Final Paycheck, PTO Balance, Retirement Plans, Etc.? 

Creating consistent policies isn’t solely important for compliance and building a strong organizational culture. It is also something that is common among fast-growth companies. This correlation exists because fast-growth companies are good businesses that strive to do everything right. However, consistent policies can also help revenue growth in more direct ways. 

When you are consistent with your policies, employees feel secure and supported. It builds the kind of culture that draws top workers. Additionally, consistent, compliant policies help you avoid potential lawsuits and legal fines. 

Recently, Asure conducted its 2024 HR Benchmark Report. This survey involved asking 1,065 small businesses about their HR practices. After the completion of these initial questions, we asked small businesses about their growth during the previous year. 

When we inquired about whether small businesses consistently follow a written policy for post-employment practices, we found a significant difference between fast-growth and zero-growth companies. 

68% of zero-growth firms said they consistently followed a written policy for final paychecks, paid time off (PTO) balances, and retirement plans.

96% of fast-growth firms said they consistently followed a written policy for final paychecks, PTO balances, and retirement plans. 

96% was one of the highest results we got on our entire survey. This means that essentially all fast-growth have written policies for their post-employment practices. The fact that there was also a 28-point spread between fast-growth and zero-growth companies indicates a strong correlation between having written policies and growing as a business. 

The Top 10 HR Best Practices for When a Worker’s Job Ends

HR policies support your company in a few important ways. 

• Provide a respectful environment for workers. 
• Ensure compliance with federal, state, and local laws.
• Give managers guidance about appropriate behaviors, performance reviews, training requirements, and more.
• Offer clear policies about benefits.
• Create rules for managing disputes and conflict resolution.

These policies don’t only apply to when an employee starts work at your organization. You also need consistent policies for after someone leaves your business. With the following best practices, you can improve your compliance and consistency on post-employment policies.

1. Create Formal Policies 

First, you need to develop a formal policy for your post-employment practices. You’ll need to clearly designate if employees are eligible for their PTO balance after leaving your employment. Often, individual states have requirements about PTO, so you should look up the rules for your area. 

All of these formal policies should be combined into your employee handbook. This makes it easier to train managers and helps your employees know where to go to find answers. More importantly, this shared handbook ensures everyone is operating on the same understanding and assumptions.

Recently, Mary Simmons, Asure’s vice president of HR compliance, learning, and development, discussed the importance of termination policies in a Mission to Grow podcast on, “Post Employment – HR’s Role After the Job Ends: Managing Post-Employment Effectively.” According to Mary, “Beyond the multiple compliance things that are going to go in there, that handbook saves you time. You’ve got one point of reference, and it helps you and your managers be consistent.”

2. Be Consistent in Implementing Your Policies 

Whatever policies you decide to make, you must be consistent about following them. Train your managers about these written policies and your expectations. Make sure they know where in the handbook your policies are located so that they can refer to them if there is ever a question in the future. 

3. Provide a Termination Letter

In general, it is a good idea to provide employees with a termination letter when they leave your company. This helps to clarify the reason for their leaving. Because it is in writing, it also serves as proof if there is a lawsuit or unemployment dispute in the future. 

For workers, there’s an additional benefit to getting termination letters. These letters typically include information about benefits, COBRA, and final paychecks, which is important data for the employee to find out. Plus, termination letters also save you time because you don’t have to constantly field questions from former employees about their ongoing benefits.

4. Inform Workers About Final Paycheck Dates

Whether you include it in the termination letter or in a separate HR policy, you should always tell soon-to-be former workers about their final paycheck date. Additionally, it’s important to remember that employers always have to pay final paychecks. Even if a worker doesn’t return their uniform, you aren’t allowed to withhold their final check. 

5. Discuss Paying PTO Balances and Retirement Plan Transfers 

As a part of your post-employment best practices, it’s a good idea to create a policy about PTO balances and retirement plan transfers. Often, states will have specific rules about whether PTO balances get paid out or not. Once you have created a written policy for your handbook, you can discuss it with workers who are leaving your employment. 

6. Review COBRA Information 

If a qualifying event happens, such as an employee leaving your company, you have to notify the group health plan administrator within 30 days. Then, they have 14 days to notify the employee about their COBRA coverage. If you are also the plan administrator, you have 44 days in total to give the employee a written or electronic notification about their rights. 

As you build your HR best practices for post-employment situations, it’s important to make sure your COBRA notification rules and letters are up to date. COBRA is a federal law, so everyone is required to follow it. 

7. Conduct an Exit Interview 

When an employee leaves your company voluntarily, it’s important to conduct an exit interview. As Simmons says, “You need to work on how to retain staff. You’re going to grow if you have less retention, but if you don’t know why people are leaving, how can you possibly know how to stem the tide of people leaving?” 

Exit interviews are a chance to ask employees about problems at your company and why they left. By asking about the salary and benefits at the worker’s new job, you can find out how your business compares to the competition.

8. Follow Employment Laws 

Depending on where you live, there may be a variety of state, local, and federal laws that govern your termination practices. Because these laws can vary so significantly, it’s important to reach out to an HR professional or employment lawyer to get more information. 

At Asure, we also have a compliance library that includes documents from a variety of legal topics. Whether you use our library or consult with one of our HR professionals, you can get immediate information about your post-employment policies and compliance. 

9. Document Everything

Creating written policies and termination letters is important from a legal perspective, especially when you’re dealing with non-voluntary terminations. You don’t want an employee to return in six months with a harassment lawsuit or accuse your organization of wrongful termination. With this in mind, you should be objective in your termination letters and avoid sugar-coating the problem. 

If someone is being terminated for cause, you should also document the entire lead-up to the termination. This means that any warnings, corrective actions, and performance improvement plans (PIPs) should be clearly recorded.

To keep your company protected, you may also want to have a third-party present during the termination. They can serve as a witness to the proceedings in case there is any dispute in the future.

10. Inform Your Team

Once someone has left your company, you need to inform your team. This is especially important with non-voluntary terminations. As a part of informing your team, you should also redistribute workloads and reassure employees about their own performance.

After a non-voluntary termination, you must act quickly to shut off the employee’s email and business accounts with your company. If the worker feels bitter about being let go, you don’t want them to have access to all of your company’s important information, client lists, and financial data. 

Gain a Better Understanding of Termination Practices 

Whether you run a Fortune 500 company or a mom-and-pop business, the right HR practices can help you succeed. When an employee is voluntarily or involuntarily terminated from a position, written documentation and consistent policies will help protect your company. 

If you’re ready to achieve faster business growth, the right HR practices can help. To learn more, contact our team of small business HR professionals today.