Offboarding: What it Means & How to Do It Best

When an employee leaves a company, a smooth offboarding process makes an otherwise gloomy event as comfortable and simple as possible. Employees remember how they are treated when they leave, so to close out on a positive note and ensure key tasks are all completed, it helps to be prepared with an offboarding checklist. 

These employee offboarding checklists and templates will give you peace of mind during your next offboarding.

What is offboarding?

Offboarding is the process of ending an employee relationship with a company. It usually occurs when an employee resigns, is fired, or is laid off from their position. However, it can also refer to when an employee retires. Agencies and contractors engaged with your company might have a bit simpler offboarding process. 

Offboarding is important because it allows companies to tie up loose ends and protect themselves legally. It also provides closure for the employee to pursue their next career steps.

When done correctly, offboarding can be a positive experience for both the employer and the employee. It gives the employer peace of mind knowing that all company property is returned and confidential information destroyed. When offboarding is managed well, the employee feels respected and appreciated for their contributions to the company.

How to share news of a workforce reduction

It’s never easy to share news about a necessary layoff event. Our offboarding templates below save you time and help make the process as smooth as possible.

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A change management plan helps ensure clear responsibilities and timelines.

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Tips for leadership

Leadership plays a pivotal role in the process and often helps determine when an employee needs to be offboarded. 

To ensure it goes well, your role is to be supportive and understanding while also maintaining a professional relationship with the departing employee. As an executive or CEO, here are some things you can do to make sure the offboarding process goes smoothly:

• As soon as you know that you need to let an employee go, it's important to let them know. This way, they can start to mentally prepare for their departure. 
• To prevent miscommunication, set clear expectations with the employee’s direct manager about who will handle what required communication and when. Communicate with the employee throughout the process to ensure they understand what is happening and why. For a larger workforce reduction, a change management plan and internal communications plan helps make sure nothing is missed. 
• Keep communication lines open so that the employee can ask questions and voice concerns. Making yourself available can help ensure you retain team trust throughout the process. You might also consider hosting an exit interview if an employee gave you notice and you would like to learn more about why they are leaving.
• Be respectful of the employee's time and energy during this difficult transition. Boundaries are always important—even more so during offboarding.
• Help with the career transition by providing resources and advice. The role of leaders and managers is to grow those under them even if that means saying goodbye. Though bittersweet, this is a moment to support the employee’s career growth. Employees can lack clarity on whether you will be a reference for them in the future. Letting the employee know that they can still contact you if they need help or have any questions shows that you're still willing to support them after they leave. If you can, offer to be a connector for them or a reference directly. 
• Make sure the departing employee feels appreciated for their contributions to the company. If their direct manager works for you, an exit interview during this process will offer a rare opportunity to gather feedback about a manager’s capabilities and opportunities for growth.
• Ensure you have an offboarding process that ties up all loose ends and has clearly defined roles and responsibilities. This includes ensuring compliance with any applicable laws, returning company property, gathering signatures on any required documents, and destroying any confidential information. Learn from any past mistakes made in the company and clearly document the offboarding process in a central source of truth where all offboarding stakeholders have confidential access like they do in Guru.

The way you approach team communication and handle offboarding leaves a lasting impression on your team. When led well, the entire team can stay productive or even become more engaged after a layoff or a teammate’s transition. By following these tips, you can make sure it's as positive an experience as possible for all involved.

Tips for managers

You play a vital role in offboarding employees. It's not always easy to have these conversations or break the news to employees, especially if you worked together a long time or you are close with the person leaving. Your job is to help your report transition out of the company and offer closure, ideally in a way that allows them to feel supported. Here are a few tips for managers:

• Get help: If you're not sure how to offboard someone, get help from HR or legal. They can guide you through the process and make sure everything is done correctly.
• Be respectful: This is probably the most important thing you can do. Remember, you're ending someone's employment, which is a big deal. Be respectful of their time, energy, and contributions. Acknowledge the things they contributed as you prepare to say goodbye. Honor their boundaries and don’t ask too much of them during this difficult time. 
• Communicate clearly: Make sure you communicate the reasons for the decision to end the employee's employment. Be clear about what will happen next and what the company's expectations are to close the relationship. Share any compensation details and be prepared to include HR during the meeting so you can answer any questions and ensure required paperwork is signed.
• Plan for the transition: Consider whether you can provide two weeks’ notice or severance compensation to support them while they land their next role. A hire that doesn't work out on your team might be the perfect match for another company. It's a good idea to have a solid plan in place for how the employee will transition out of their role. 
• Don't try to do too much: Offboarding is a process, not a single event. Don't try to do everything at once. Focus on the most important tasks and take care of them one at a time.
• Stay connected: You job is to grow those under you, which includes saying goodbye. Offboarding is a key milestone where you can show you still support the employee’s career growth. Don’t leave the employee guessing about whether you would be a positive reference for them later. If your report goes above and beyond by documenting company information, projects, and processes to support the person taking on their responsibilities, send them a note to say thank you. Offer to be a reference or introduce them within your network if you can. Since most job applications are online, a positive recommendation on LinkedIn goes a long way toward helping them in their next career phase.

Offboarding checklist

To make sure the offboarding process is as smooth as possible, there are certain tasks that need to be completed. This checklist will help you make sure you don't miss a thing.

1. Work with HR: As soon as you know an employee is leaving, notify HR so they can start the offboarding process. If you are new to offboarding, ensure you have a conversation early about how to document poor performance or other issues so the company is legally protected.
2. Notify relevant parties: When an employee leaves a company, it's important to notify the relevant parties. This includes the HR department, the employee's manager, and any team members they worked closely with. Larger workforce reductions require a company-wide communication plan.
   

1. Return company property: All company property must be returned before an employee leaves. This includes laptops, phones, credit cards, keys, and any other items that were given to them for work purposes.
2. Destroy confidential information: Any confidential information that the employee has might need to be destroyed. This includes hard copies of documents as well as digital files.
3. Complete an exit interview: An exit interview is a chance for the employer to learn more about why the employee is leaving and get feedback on their time at the company. It's also an opportunity for the employee to ask any questions they may have.
4. Close out any final compensation: The final step is to send any compensation or severance that has been agreed upon. This includes ensuring that all relevant paperwork is signed and any final payments are made.

The offboarding process is important to ensure a smooth transition for both the employer and the employee. With this offboarding checklist, you can make sure that all the necessary tasks are completed and that everyone involved feels respected and appreciated.

Offboarding best practices

In addition to the checklist, there are a few best practices to keep in mind when offboarding an employee.

• Be respectful: The way you treat each employee reflects on the company and is something the team will remember. Offboarding is a chance to show your appreciation for their contributions to the company. 
• Keep it professional: Offboarding should be handled with professionalism. Avoid any personal attacks or confrontations.
• Be clear: Offboarding can be a confusing and emotional time for everyone involved. To avoid any confusion, make sure you are clear about what is happening and why. Be prepared to share with transparency to maintain team trust while also clearly understanding any boundaries you need to hold with confidentiality for the company. 
• Give appropriate notice: Depending on the situation, you may need to give your employees two weeks notice (or more) before they leave. When possible, give them time to wrap up any loose ends and say goodbye to their colleagues.
• Ensure transparency: When an employee leaves a company, it's important to notify the relevant parties. This includes the HR department, the employee's manager, and any other team members they worked closely with. Transparency during these conversations will help maintain trust and productivity during the transition.

The offboarding process is an important part of managing any company. With these best practices, you can keep relationships positive and fully close any loose ends. 

Best practices for closing compensation and severance

When an employee leaves a company, it's important to have a plan in place for how their severance pay and benefits will be handled. Be prepared to share final compensation details right away with the employee if you are letting them know they will be leaving the company. The employer should provide the employee with a clear severance agreement that outlines the terms of their severance pay and benefits. The employee should also be given a reasonable amount of time to review the agreement and ask any questions they may have.

It's also important to remember that severance pay and benefits are subject to taxation. The employer should withhold appropriate taxes before any final payout to the employee.

How to determine severance

There are a few factors to consider when determining severance. These questions will help you come to a decision that is in the best interests of everyone involved. 

• How long the employee has been with the company? Generally, the longer an employee has been with a company, the more severance they will be entitled to.
• Does the employee has an employment contract? If an employee does have a contract, the terms of the contract may determine how much severance they are owed.
• Why is the employee leaving? If the employee is leaving voluntarily, they will usually be entitled to less severance than if they were laid off or let go.

Determining severance can be difficult, but it's important to ensure that you are fair to both the employer and the employee. 

Offboarding FAQ

What should be included in offboarding?

To make sure you don't miss a thing, you will want to:

1. Work with HR before taking any action with the employee. Make sure you know what, if anything, needs communicating or documenting and meet those needs before you reach out to the employee.
2. Notify relevant parties, including the HR department, the employee's manager, and any close team members. You might also consider company-wide communications when needed. 
3. Ensure any company property is returned, including laptops, phones, credit cards, and keys.
4. Destroy confidential information in hard copies and digital files.
5. Complete an exit interview to learn more about why an employee is leaving and get feedback on their time at the company. Employees can also ask any remaining questions during this meeting.
6. Close out any final compensation as agreed. This includes ensuring all relevant paperwork is signed and any final payments are made.
7. Learn from the company’s experience and include any process improvements in a single source of truth like Guru to prevent any issues from recurring.

How can I improve my offboarding?

Offboarding is just as important as onboarding. In fact, many would argue that it's even more important because a bad offboarding experience can ruin the relationship you've built with an employee - or an entire team. Workforce reductions, managed poorly, can draw public scrutiny. 

The best offboarding processes have these in common:

1. The process is planned and documented for the right stakeholders in a single source of truth. Offboarding should be a deliberate process, not something that's left to figure out in a scramble.
2. Communicate early and often. Don't wait until the last minute to start talking about offboarding. The sooner you start the conversation with the stakeholders in the transition, the better.
3. Be clear about what's happening. Offboarding can be a confusing and stressful time for everyone involved. Make sure you're clear about what's happening and why. Be prepared to answer any questions by anticipating them.
4. Make sure everyone knows their role. Offboarding is a team effort for HR, IT, Ops, leadership, and managers, so make sure everyone involved knows their role in the process.
5. Be flexible. Offboarding is not a one-size-fits-all process. Be prepared to tailor your offboarding process to the individual and circumstances. If there is a larger layoff event, equip your entire management team with transparent information and support to ensure they can transition people smoothly.
6. Don't forget about the little things. It's easy to get caught up in the big picture, but don't forget about the little moments of empathy, communication, and transparency that can make a big difference in your team’s engagement long-term. 
7. Follow up after the fact. Offboarding doesn't end when the person leaves. Make sure you follow up after they're gone to hear how the team is doing and with the former employee to see how things are going.

With a little planning and effort, you can make sure that everyone has a smooth transition. Improve your offboarding and you'll improve your reputation as a leader, strengthen your relationships, grow you network, and help ensure higher employee satisfaction. 

What is an offboarding letter?

An offboarding letter is a formal notice stating an employee is leaving the company. It is typically written by the HR department and includes information about the employee's final paycheck, benefits, and any other relevant details.

What should be included in an offboarding letter?

Any offboarding letter needs to include:

• The date of the employee's last day of work
• The date and method of payment for the final paycheck
• Details about any outstanding vacation or sick days
• Information about the continuation of health insurance coverage
• Instructions for returning any company property (e.g. laptop and keys)

Can I write my own offboarding letter? 

Yes, you can write your own offboarding letter. However, it is important to make sure that the letter includes all of the required information and is written in a professional tone. If you are unsure about what to include or how to format the letter, it is best to consult with HR or a legal advisor.

What is the difference between an offboarding letter and a resignation letter?

An offboarding letter is typically written by the HR department and includes information about the employee's final paycheck, benefits, and any other relevant details. A resignation letter is an employee-initiated document that states the intention to leave the company. 

The resignation letter template below will help you formally notify your manager. 

What are the most common mistakes people make during offboarding?

One common offboarding mistake is failing to communicate the process to the departing employee. This can leave the employee feeling uncertain and stressed about what will happen next. Make sure you clearly explain the offboarding process to your employees so they know what to expect.

Another common offboarding mistake is neglecting to collect important signatures or company property from the departing employee. For those working in the office, items such as laptops, company credit cards, keys, and ID badges should be collected before the employee leaves to prevent issues. For remote employees, you can share instructions for returning any company property via FedEx or another insured shipping method.

Finally, another offboarding mistake companies sometimes make is failing to transfer important knowledge and information to the departing employee's replacement. This can leave those who stay feeling overwhelmed and under-prepared. Make sure you allow time to transfer any important knowledge and information to the replacement before the departing employee leaves into a single source of truth like Guru. This will help ensure a smooth transition for everyone involved.