Employee offboarding is formal separation process your business can use to address employees who exit the company through resignation, layoffs, termination, or retirement. It involves a series of steps to transfer employee knowledge and job responsibilities, deactivate passwords and access rights, turn in equipment, and collect feedback through an exit interview.
Offboarding for employees involves recovering company-owned equipment such as computers, ID badges, and phones. It also involves preventing issues with computer security by deactivating passwords and restricting network access to company systems to prevent theft or data misuse. Employee offboarding also ensures timely and accurate processing of final pay.
For a complete list of steps check out the offboarding checklist below.
What is offboarding’s benefit to your business?
When an employee leaves, it puts your business at risk in several ways. Following a formal employee offboarding checklist ensures that your business can cleanly end the relationship with an exiting employee.
Improved security

Proper offboarding helps ensure security by preventing unauthorized access to critical information and data. By restricting access to company websites, internal documents, and third-party software, you ensure that confidential company information stays confidential. Offboarding also prevents theft or misuse of company-issued equipment.
This can be especially important if an employee is laid off or terminated. Imagine the potential impact on your company’s revenue if a fired salesperson downloads a full list of their prospects and then takes a new job with a competitor.
It also prevents situations where a disgruntled employee can prevent coworkers from accessing critical software or network access – such as when a network engineer for the City of San Francisco refused to turn over his network passwords and locked his co-workers out of the city’s network. In that case the engineer was forced to pay $1.5 million in restitution, the bulk of which was to compensate his employer for their efforts to restore network access.
Having a formal offboarding process will help prevent situations like this from happening.
Institutional knowledge transfer

When an employee leaves, years of experience and institutional knowledge often walks out the door with them. This “brain drain” can have significant impact on day-to-day operations. This is particularly true of long-tenured employees with years (or even decades) of tribal knowledge about your business that isn’t captured in written form.
It’s critical that your business has formal procedures to document and transfer knowledge to remaining employees to minimize the disruption caused by employee turnover. Formal documentation allows your business to continue running as smoothly as possible once an employee exits, and can help speed up onboarding of a replacement worker for that role.
Honest, constructive feedback

Proper exit interviews are also an important part of offboarding, especially for employees who leave voluntarily. Getting honest feedback in an exit interview can help you better understand both the positives and the challenges your business is facing so you can try to continually improve employee satisfaction and reduce additional turnover.
Exit interviews can also expose issues that business owners and HR teams may not be aware of. While current employees may be wary of discussing things like poor managers, problematic coworkers, or flaws in business strategy, an employee who is leaving the company no longer has an incentive to keep this information to themselves.
The exit interview also gives you a chance to better understand positive aspects of working for your company. Knowing what is important to employees — and what efforts are working — will help you validate ongoing initiatives so you can continue to improve your company’s culture.
Try to approach exit interviews with calm, open-ended questions designed to get honest feedback – even for employees who seemed overly negative or may be leaving under dubious circumstances. Taking feedback seriously can help improve your company’s culture, and can also help keep the door open for high-quality employees to return to your company in the future.
It’s important that you clearly communicate news of an employee’s departure. This can prevent false gossip from spreading which can impact morale of your remaining employees, and helps foster a culture of openness that leads to improved employe satisfaction.
Accurate payroll and paperwork
You’ll also need finalize payroll and complete other exit paperwork. Getting a formal letter of resignation is important, and you need to make sure that you update your payroll system accordingly. In some cases employers who fail to do this end up unknowingly paying employees in error, such as the case of the employee who collected over $250,000 after being terminated.
The exit interview should involve a quick discussion on the timing and amount of the employee’s last paycheck. You should also review the continuation of benefits including COBRA or other coverage that extends past the date of termination.
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Contact VensureHRWho is involved in employee offboarding?
For many midsize businesses, your HR team will typically act as the coordinator for employee offboarding. It’s important the offboarding process includes IT managers, facility managers, and departmental managers.
For smaller businesses that don’t have dedicated HR teams, the process may be managed by the company owner, office manager, or the employee’s supervisor. In those cases it is critical that a formal offboarding checklist exists to ensure steps don’t get missed.
Small business HR software can help you automate the offboarding process to avoid missing critical steps. HR software can also streamline other time-consuming HR tasks such as employee recruitment, hiring, onboarding, payroll, and compliance with employment laws.

Employee offboarding checklist
Use this employee offboarding checklist to help you make sure that your business doesn’t miss any critical offboarding steps:
- Security
- Have employee turn in any company-owned property
- Laptops and computer bags
- Cell phones
- Employee IDs and access badges
- Parking passes
- Company vehicles
- Restrict login access
- Network and computer login access
- Email, phone conference, and instant messaging accounts
- Third party software passwords (Access to critical company systems, Intranet, Salesforce, Marketo, Website CMS, Analytics, etc.)
- Access to sensitive company documents
- Have employee turn in any company-owned property
- Payroll and other paperwork
- Update payroll system with termination date
- Discuss employee’s last paycheck, including payout for unused vacation days or employee severance package
- Have employee sign letter of termination
- Sign non-compete or non-disclosure forms
- Benefits documentation: continuation of healthcare benefits (COBRA), retirement plan, unemployment insurance, etc.
- Knowledge transfer
- Prioritized documentation of routine tasks, with step-by-step instructions if needed
- Status updates on current and planned projects
- Have existing employee train coworkers on how to do those tasks
- Hand off access to files or systems
- Obtain list of contacts in and outside of the organization
- Exit interview
- Obtain feedback on why employee is leaving
- Ask about areas company can improve
- Discuss if employee had the support and resources necessary to do their job
- Determine employee’s relationship with their manager
- Ask what could have been done to make them stay
- Try to keep door open for valued workers to return to company
- Communication
- Send email or verbally notify coworkers
- Notify external contacts (such as customers the employee worked with, vendors they worked with, etc.)
Some companies and industries have unique needs that require additional steps be added to their offboarding checklist in addition to those above. We recommend updating your checklist with these items to ensure consistent offboarding process across your company.
HR software can help you automate many of these steps to simplify the process and ensure you follow offboarding best practices.
If you find that time spent managing HR tasks is pulling you away from other critical areas of your business, consider partnering with an HR service provider who can help manage all aspects of HR including payroll, benefits, compliance, hiring, the onboarding process, and offboarding.
Summary

Employee offboarding (definition): a formal process to manage employees who leave your business.
Using an offboarding checklist can help your business improve security, address necessary paperwork, minimize loss of institutional knowledge, and get feedback to improve your work environment.
If you’re looking for more information on how to reduce risk for your business and improve how you find, hire, onboard, and offboard employees, learn how partnering with an HR service provider can help. Connect with us today!