Final Communication to a Departing Employee

When an employee leaves, you will have certain responsibilities regarding what you have to tell him or her. It will also be in your best interest to provide some information regarding what he or she can expect from you after they're gone. This is true whether an employee quits or is fired. For this reason, you might consider putting together a final memo or letter that:

outlines the information that you may be legally obligated to provide
explains the requirements relating to final pay
discusses your policies relating to post-employment relations and provides for any written agreements that may be helpful

In addition to these purposes, a final communication may be the vehicle to getting feedback about why an employee chose to leave. Some businesses conduct formal exit interviews when an employee quits to obtain information that may help them retain employees in the future. This isn't an issue when you choose to terminate the employment relationship, but you may discover a pattern or cause if turnover is higher than you'd like or expect.

Information you must provide. If you maintain a group health plan, federal law requires you to notify a departing employee that he or she can purchase continuing health insurance coverage under your plan. Each fired employee must be notified of the possibility that he or she may be eligible for unemployment insurance benefits. If you have a severance pay policy, you'll have to provide certain information relating to that policy. That isn't the case if you negotiate severance pay on a case-by-case basis.

Final pay. Most states have laws requiring that the final payment of wages be made when or very shortly after the employment relationship terminates. In addition, there are varying rules relating to accrued but unused vacation pay or paid time off. You should let the employee know what your policies are, since the final check will likely be for a different amount than a usual check. It might be helpful to point out what period the compensation relates to if the final check covers more or less than a regular pay period.

Post-employment relations. The most important aspect of your relationship with an ex-employee is what you can expect from him or her and what the ex-employee can expect from you. There are a number of issues to address.

What is your policy on providing references to prospective employers? It should be clearly communicated to the employee.
Do you want the former employee to sign a document releasing all employment and reference related claims, such as wrongful termination or an improperly negative reference? If so, make clear what it is you want and what you're willing to provide in exchange. Severance packages or an agreement to provide a full and honest reference might induce an employee to give up the right to sue.
Do you want to get an agreement from the former employee not to compete with you for some period of time? Again, make clear what you want and what you're willing to pay to get it.
What will the employee say about your business? If a former employee denigrates your business, it can have a negative impact on your ability to get good employees or, worse, on your bottom line. Use the final communication as a vehicle for attempting to maintain good relations.