How to handle employee resignations
Sometimes, you are prepared for an employee’s resignation, having seen the signs of disengagement in their role. You may have discussed their interest in moving on to a job that will give them the opportunities they crave to grow professionally.
Alternatively, their resignation may come as a surprise. You may attempt to retain them, however, in the end you may need to accept the employee’s decision to resign.
Therefore, acting professionally is important. This maintains a good relationship with the employee, so they may be willing to return to your organisation in the future when other opportunities arise. If you do not act professionally, it may damage your employer brand and prevent other applicants from wanting to work for you.
Consider making a counteroffer
If the person is a high-performing employee and is critical to the team, you may be prepared to offer anything to keep them. However, counteroffers can be counterproductive.
Keep in mind that your highly valued team member decided to quit for any number of reasons. For example, it may be because of the company culture, changes in management or a lack of career development.
It is rare that money is the only issue. While remuneration may be a key driver, employees who are happy and satisfied with their work are less likely to seek a change.
So, if you offer a financial incentive to stay but do not address their core concerns, you will most likely end up with an employee who is still just as disengaged, but now on a higher salary.
However, a counteroffer may be effective if you address the specific causes of your employee’s dissatisfaction. If it is a lack of career development opportunities, moving them to another role or creating a new position for them may resolve the problem.
However, if you do not think a counteroffer will be effective, you can try to maintain a relationship with your employee after they leave and recruit them again in the future. During the resignation process, it is important to treat all parties respectfully to ensure a smooth transition and uphold your company’s reputation.
Remember, former employees may become clients or refer clients in the future, so maintaining positive relationships can benefit your business long-term.
Ask for a written resignation
Whether you accept a written or verbal resignation may come down to the size of your business, how you prefer to operate or what clauses are written in the employee’s contract. Most employment agreements require a written resignation letter. Receiving a resignation in writing can be good for clarity and to formalise the process.
If an employee resigns verbally, you have the right to request that they put their resignation in writing, even if it is not included in an employee’s contract. Acknowledge receipt of the resignation letter and respond in writing to confirm it. In your response, consider formalising the date of the employee’s last day, in line with any notice period they are required to serve.
Determine how much notice is required
Whether your employee serves a notice period may depend on the type of employment agreement that you have in place. Generally, full-time and part-time permanent employees are required to give notice. However, under the Fair Work Act, casual employees are not.
Notice periods are designed to give both parties time to prepare for the transition. For example, an employee may have to give two weeks’ notice. This period begins the day after the employee informs you they are resigning.
You must pay your employee up to and including their last day, unless the employee does not serve their notice.
For example, if they are required to give two weeks’ notice under their agreement, but leave after one week, you can withhold the remaining one week’s pay. The amount of money you withhold can only be up to the amount your employee would have earned if they had given proper notice and worked out the notice period.
You may decide to let them leave early and pay out the remainder of their notice period. Some employers choose this for business reasons, such as preventing the employee from taking sensitive information to a new job. Others may allow an early departure for compassionate reasons, such as when an employee resigns due to ill health or to care for a family member.
If you do not have a notice period in your employee’s contract, your employee may leave immediately. Most will provide what they believe is reasonable notice, although it may be shorter than what you need to replace them. It’s good practice to have an employment contract and a clause relating to a notice period.
Collect company property on or before their last day
Decide when you will collect company property. You may allow them to return equipment, such as laptops and tools, before their last day. Also remember to cancel company-issued services, such as mobile phone plans. Keys, security badges and access credentials can be returned on their last day.
What to do after an employee resigns
Taking some strategic steps after an employee resigns may help your business analyse any long-standing issues that contributed to them leaving. You can also use this opportunity to improve your operations.
Conduct an exit interview
An exit interview is a meeting between an employer and an employee who has decided to resign. Think of it as the opposite of a job interview. Instead of finding out why someone wants to join your business, your goal is to find out why they want to leave.
An exit interview is a chance to get feedback about your soon-to-be-former employee’s experiences, both positive and negative, and to discuss their experiences and plans for the future. Learning the company’s strengths and weaknesses can better guide business strategy and improve retention rates.
Exit interviews are completely voluntary. If your employee does not feel comfortable participating, ensure they can decline freely without facing any repercussions. At the least, consider it an opportunity to wish your departing employee well in their future endeavours. This can help maintain positive relationships.
Make a hiring plan
Consider the effects the employee’s departure will have on your business. Initially, their departure may create a higher workload for the rest of their team. Devising a hiring plan to refer to when employees resign can help you tackle these situations.
Consider distributing the employee’s tasks to other team members or a temporary internal replacement, and allow them the time to complete a handover together before the resigning employee’s last day. This ensures business continuity.
Collaborate with their team leader and/or your hiring manager to identify the specific skills and experience needed in a replacement. Consider asking current employees what skills, experience and attributes new hires require. You may decide to create a new role or change the job description to suit the new skills required.
Advertising the position as soon as possible may minimise productivity losses caused by the vacancy. Ask your employees for referrals for suitable candidates, and consider promoting someone internally.
Process final payments
Check what money you still owe your departing employee when their employment ends for their final pay. Process this promptly, ideally by the next payday after employment ends, but check the required timelines that are outlined in the employment agreement.
Final pay includes:
- outstanding wages, including penalty rates and allowances
- accrued and unused entitlements, such as long service leave and annual leave
- payment in lieu of notice period
By receiving written notice of resignation from your departing employee, following prescribed notice periods and processing final payments, you can end the employment relationship quickly and efficiently. Approach the resignation as a learning opportunity and a chance to reflect on whether the role still meets your business’s needs.
