What To Do When an Employee Leaves: a Step-by-Step Guide

Employees in the United States are resigning in droves. According to the Labor Department, 4.3 million people quit their jobs in January 2022, down only slightly from the record-high 4.5 million quits in November 2021. Experts say there’s no sign of the Great Resignation slowing down any time soon, so it’s critical to figure out what to do when employees quit suddenly.

As a business owner, not only do you have to handle resignation logistics and ensure compliance, you also have to maintain operations and employee morale amidst the disruption. That’s why it’s important to have a process in place. Below, we’re sharing what you need to do when an employee resigns—and how you can prevent resignations from happening in the future. 

Why employees quit

There are countless personal and job-related reasons why employees quit, but most resignations boil down to four main factors:

1. Employee compensation: Sixty-seven percent of employees quit their jobs because of a low salary, according to Zety’s 2021 Great Resignation survey. Particularly now—when inflation is high and the pandemic is still part of everyday life—people want better, more equitable compensation. 
2. Career growth: Sixty-six percent of employees leave in search of better growth opportunities, Zety’s survey found. Those employees aren’t content to stay in the same role without a clear career progression track; they want professional development opportunities and a plan for moving forward. 
3. Work-life balance: A healthy work-life balance is the top reason employees stay at their jobs, according to the 2021 Engagement and Retention Report by the Achievers Workforce Institute. A majority of employees today want more flexibility in their workplace, more mental health support, and clearer boundaries between their work and personal lives. 
4. Recognition: In the Zety survey, not feeling valued by their manager was the third most common reason why employees quit. If employees don’t feel recognized or appreciated for their effort and skills, they’re more likely to search for other jobs. 

What to do when employees quit

It can be hard to know where to begin when an employee quits without notice, but fortunately, there’s a step-by-step process you can follow to respond. Here’s what you need to do:

Step 1: Get clarification

The first step to take when an employee quits is to have a conversation with them. Instead of getting angry (or panicking), get curious. Start by asking the employee why they’re leaving. 

Understanding the reason behind someone’s exit is crucial; it gives you valuable information about how to respond in the moment, whether or not to make a counter offer, and what to change going forward. 

For example, if one of your best employees tells you they’re leaving because they can’t make their shift times work, you could offer to switch their shifts. More often than not, though, an employee who decides to quit has usually made up their mind. That’s why it’s best to respond to the news in a calm, affirming way. 

Step 2: Coordinate dates and responsibilities 

If you have human resources staff (HR), it’s crucial to direct your employee to HR so they can file a formal resignation. However, if you don’t have an HR person on staff, you’ll need to take the following steps:

• Get a signed and dated resignation letter. Ask your employee to write up an official notice of resignation that shares the reason they’re leaving. Make a copy of this statement.  
• Plan the employee’s departure date. If you require two-week notice for resignations, schedule the employee’s final day and check to make sure that your employee can work the next two weeks. If they can’t—or if you don’t want them to continue working for whatever reason—you’ll need to pick another departure date and get on the same page with your employee. 
• Discuss final responsibilities. If your employee is working for another two to three weeks, make sure you go over their schedule and specific responsibilities for the remainder of time. They may need them to close out a certain project, transfer their contacts to a coworker, or train someone else to take over their daily tasks. If your employee is leaving that same day, take the time to gather any information you need from them (like client contacts or project statuses). 
• Schedule an exit interview. Pick a time that works for your employee and ask a neutral party to conduct the interview. 
• Confirm the employee’s personal information. You need an employee’s up-to-date mailing address, personal email address, phone number, and emergency contact information so you can send them their last paycheck, W-2 form, and relevant benefits information. 
• Prepare the employee’s file. You’ll want to include their resignation letter, compensation records, a record of the exit interview, their personal contact information, and any additional documents (like non-disclosure agreements). 

Step 3: Organize the final paycheck and benefits information

Once you’ve figured out when your employee will stop working, it’s time to settle their payment. Start by checking your state’s laws regarding when you need to issue an employee’s final paycheck. Some states dictate that you need to pay an employee within 72 hours of them giving notice, while others require payment by the next regular payday. 

As you’re calculating your employee’s paycheck, make sure you factor in things that can affect the final amount, like unused sick days, accrued paid time off, commissions, and bonuses. If you need help, consider reaching out to your business accountant; they can double-check the math and ensure you’re not making any errors. 

You’ll also need to provide your employee with information about their health insurance coverage and benefits package. They need to know when their health insurance runs out, information about their 401k plan, and what to expect in terms of other benefits ending. 

Step 4: Notify other staff and employees

After you square away paycheck logistics with your HR person or accounting expert, let people know about your employee’s departure. Consider telling any key business partners or managers individually, then send a workplace-wide email to everyone else. 

Unless you want to—and the employee gives their consent—you don’t need to share the reason why an employee is leaving. Just keep the message simple and positive. You can say something like, “I wanted to let you all know that Jane Andrews will be working her last day next Friday. We’re grateful for her contributions and we wish her well on her next endeavor!”

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HR

Step 5: Reassign responsibilities 

As soon as everyone knows an employee is leaving, work on re-assigning that employee’s shifts or responsibilities. You may need to adjust your monthly shift schedule, move deadlines or project dates, or set up one-on-one chats with certain employees. Some employees may need training to take over another person’s tasks, while others might need a pep talk in the wake of their team members or subordinate leaving. 

Step 6: Make a replacement plan

Even if your employee is staying on for another several weeks, it’s critical to begin thinking about a replacement plan. Promoting or hiring a new employee can take months; starting the process early can help minimize the time gap and lost revenue.

The first step is to determine whether or not you need to replace your departing employee with another full-time worker. If you do, then you need to figure out whether you’ll be promoting someone from within or hiring externally. Either way, it’s a good idea to review your budget, write an accurate job description, and create and distribute a new job ad in a variety of different places. 

On the other hand, if you think you can get by without hiring another full-time employee, you’ll need to figure out how. It might involve outsourcing tasks to an independent contractor, for example, or redistributing work among several different employees. In any case, it’s helpful to 

review employee performances and workflows to see what’s feasible. 

Pro tip: If you decide to give employees additional tasks or shuffle their workloads, make sure you’re compensating them fairly and providing them with clear instructions and goals for doing their work. 

Step 7: Conduct an exit interview

An exit interview is one of the most valuable sources of information when an employee leaves. On the day of an employee’s departure, set aside 30 minutes to an hour to discuss their overall work experience and reasons for leaving. If you don’t have a designated HR executive, ask a neutral person to conduct the interview (like the manager of another team), so your employee is comfortable being candid. 

Here are some questions to consider asking:

• Why did you start looking for another job?
• Why are you leaving? 
• Would you ever consider returning to work here? Why or why not?
• Did you feel equipped to do your job here? Why or why not?
• How was your relationship with your manager? 
• What did you think of the work environment or company culture? 
• How valued did you feel working here? 
• Did you ever have concerns about the job or company culture? What were they?
• How do you think your job or role changed over time? 
• What qualities would you consider most important for hiring for your replacement? 
• What was your favorite part of your job? Least favorite? 
• Were you given clear instructions and goals to work toward? 
• Did you receive feedback on your job performance? How often?
• What would you change about your job or workplace? 
• Do you have any suggestions for how we can improve? 

Step 8: Gather the employee’s workplace belongings 

On an employee’s last day, make sure you collect any belongings the business owns. Think: an employee laptop, cellphone, equipment or tools, uniform, building keys, ID badge, or employee manual. It’s also important to change any passwords to employee email or work accounts, and to remove the employee’s access to any internal digital systems. 

Step 9: Send your employee off with warmth

Depending on your workplace culture and particular business, you may or may not have the time or resources to host a send-off party for every employee who leaves. However, it’s still a good idea to wish the person well. Saying goodbye on a positive note helps you maintain strong relationships—and set an example to your other employees. 

Consider doing something kind for the person leaving, like giving them a handwritten card, restaurant gift card, flowers, or edible treat. Even taking the time to walk your employee out of the workplace on their last day and thank them for their time can go a long way. 

Step 10: Reflect and adjust 

When an employee quits, take time to reflect and review their feedback. Processing an employee’s experience—and considering your own experience working with that person—can give you ideas for how to improve your business practices, employee management, and workplace culture. 

Make a list of immediate and long-term changes you’d like to make, then list the reasons why. For example, maybe you want to update your job descriptions to paint a more accurate picture of the day-to-day work and attract more qualified candidates. Or maybe you extend the training period for employees, so they have more confidence on the job. 

How to improve employee retention

Improving employee retention at your business requires strategy, time, and the willingness to make big changes. The most effective way to reduce employee turnover is to find out what your current employees want—through email surveys or one-on-one check-ins—then work on implementing their feedback. 

Here are a handful of ways to invest in your employees’ satisfaction at work:

• Offer more flexibility at work, like flexible work hours, choice of shifts, or work-from-home options. 
• Offer a wider variety of benefits, like covered therapy sessions or monthly wellness stipends. 
• Create a career growth plan with each employee. 
• Train managers to give more recognition and feedback. 
• Invite a diversity, equity, and inclusion expert to evaluate your business practices and pay structure.