Offboarding Process: How It Works & Best Practices

When an employee leaves a company, offboarding is the structured process used to manage the exit. This final stage of the employee life cycle applies to employees who are leaving for any reason, including firings, resignations, retirements, and layoffs. With firings and layoffs, there are additional legal compliance issues that must be appropriately handled during the offboarding process.

When offboarding is done well, it leaves the door open for a resigning employee to return in the future. Regardless of the departure reason, it is essential to try to end the working relationship on a positive note, gather feedback, and proactively prevent lawsuits. A thoughtful and well-planned offboarding process at the end of the employee life cycle matters as much as your onboarding process at the start of the employee life cycle.

What Is Offboarding?

Offboarding is the structured process used to separate voluntary and involuntary departures from the company. Offboarding contains many aspects, including notifying coworkers, transferring projects and knowledge, retrieving company property, handling benefits, separation notices, and conducting exit interviews. Some goals of the process include protecting the company legally, maintaining a positive relationship with departing employees, and gaining valuable feedback. Employees can streamline the process with offboarding software.

Offboarding Benefits

There are many benefits of a successful offboarding process. The final interactions that employees have with your company will leave a lasting impact that determines future actions. When done well, former employees may work for your company in the future and make referrals for new talent.

• Maintains positive relationships: After employees depart in a positive manner, it leaves room for them to return in the future, which is called boomerang employees. LinkedIn reports that boomerang hires are skyrocketing in 2025.
• Encourages networking and advocacy: When employees have a positive offboarding experience, they are 45% more likely to refer talent, according to LinkedIn. Employee advocacy programs continue with your former employees, which helps to boost your brand and attract top talent.
• Improves company culture: A healthy company culture values and respects employees at every stage of the employee life cycle and after their departure. Your current employees are observing how departing employees are treated, which impacts respect, loyalty, and trust.
• Prevents misunderstandings: Offboarding provides a valuable opportunity to resolve any misunderstandings that departing employees may have, from clarifying reasons for their departure to getting their side of events. It is an opportunity to inform them of their rights, including applying for unemployment compensation.
• Increases compliance: Many compliance issues need to be handled properly during offboarding, including laws about paying out PTO and ensuring you are not using illegal reasons to fire someone. Increased compliance decreases the risk of penalties, fines, and lawsuits from noncompliance issues such as wrongful termination.
• Protects the company: An effective offboarding process helps to protect your company against reputation damage, complaints, lawsuits, data security, and noncompliance.
• Supports actionable feedback: Gathering feedback from departing employees provides meaningful data to help prevent employee turnover and boost job satisfaction.
• Boosts employee retention: When you take the time through exit interviews and surveys to understand why employees resign, you can use that feedback to create strategies that boost employee retention.
• Reduces costs: Employers can prevent increased expenses associated with poor offboarding. Deloitte reports, “Companies with structured offboarding save 25% on average in post-departure costs.”

The Risks of Poor Offboarding

Poor offboarding is associated with many risks, including disrupted workflows, reputation damage, legal issues, data breaches, and a weakened company culture. When employers mishandle departures, it results in employees feeling resentment and increases the likelihood that disgruntled employees will take negative action.

Newployee stated, “55% of HR leaders report that poor offboarding has resulted in negative reviews on employer review platforms.” They provided additional stats illustrating how dangerous poor offboarding is for data security and compliance. Less than half of employers revoke access within 24 hours of a departure, and more than half have experienced a data breach as a direct result of poor offboarding. According to the Ponemon Institute, “20% of data breaches involve former employees within six months of departure.”

Offboarding Best Practices

There are many offboarding best practices for employers to use with departing employees. From transferring projects to conducting exit interviews, the process works best when organized with an offboarding checklist.

Utilize Checklists and Templates

Organize the offboarding process and increase compliance by using an offboarding checklist and templates for communication. You can edit an existing offboarding checklist template or utilize software to automate and streamline the process.

Using standardized templates ensures consistency in your communication and increases compliance. A checklist helps with the formal steps for important documentation and procedures. From a written acceptance of a resignation letter to updating company directories, there are many aspects to handle.

Coordinate the Transition

Once you learn of voluntary departures, coordinating the transition begins. Start by notifying stakeholders and co-workers about the departures. Plan how projects and knowledge will be transferred during the remaining time. For involuntary departures, it will be difficult to transfer knowledge and projects since employees and co-workers will not have advanced notice.

Provide a Separation Notice and Other Documents

A separation notice is a formal document that clearly states the reason why an employee is leaving the company, as well as other information, such as job title, wages, employment length, and the availability of unemployment benefits. It signifies the end of the working relationship. This important document serves as a helpful paper trail for unemployment claims and disputes that may arise after separation.

Currently, 21 states have laws that require separation notices or specific pamphlets for employers to distribute. Some states specify the information that must be included in the notice. However, even if your state does not require separation notices, it is best practice for employers to always provide them to ensure consistent practices and to protect both employees and employers.

Severance and benefits information may also be included in a separation notice, or it may be separate documents. It is helpful to have two templates for separation notices: one for involuntary terminations and one for voluntary departures. Have the templates reviewed by a lawyer. This is a good time to also remind employees about the NDA and non-compete clauses that were included in the employment contract.

Address Benefits and Compliance Issues

Federal and state laws apply to offboarding items, including termination reasons, advance warning for layoffs, separation notices, severance agreements, paying out PTO, continuation of benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA), and how quickly final paychecks must be issued. You can manage compliance with a resource like the 50-State Separation Kit created by SixFifty.

During this process, you want to ensure compliance with all laws and anticipate employee questions. Explain options for money in retirement plans and other benefits issues. Provide all the documents and resources that employees need.

Conduct Exit Interviews and Surveys

An exit interview allows employers to gather valuable feedback from departing employees about the reasons they are leaving. With many employees citing higher salaries, poor managers, and not enough growth opportunities as top reasons for leaving, employers learn how to improve from exit interviews. USC provides tips for employees who are concerned about being summoned to exit interviews, such as opting out of answering certain questions. Employees can even request exit interviews if not offered.

The quality of the feedback you receive depends heavily on the open-ended questions you choose to ask, how you ask them, the tone you set, how you put the employee at ease, and how well you actively listen. It is helpful to explain that you plan to use the information they provide to make positive changes. BambooHR provides 20 questions to ask during exit interviews. Question topics include relationships with co-workers and managers, employee experience, job role and growth, and how the workplace can improve.

When you learn that an employee is leaving voluntarily, schedule the exit interview to be held in a private setting during their last week. In some cases, it may be necessary to conduct an exit interview by phone after the employee leaves. A human resources representative or other neutral person should conduct an exit interview. Avoid having the direct manager conduct an exit interview since employees will likely have feedback about their manager that they will not tell them directly.

In addition to exit interviews, digital exit surveys provide actionable insights. Employers can utilize employee survey tools to conduct many types of surveys, including exit surveys. Some employees may feel more comfortable answering in a survey than in a face-to-face interview. Anonymous and standardized exit surveys can be conducted as a follow-up to exit interviews.

Questback shares best practices and challenges for exit surveys, including planning, questions, implementation, and analysis. They explain the reasons why employees may be hesitant to honestly share feedback, and why it is essential to ensure anonymity and confidentiality.

Show Gratitude

Celebrating departing employees fosters a positive company culture, encourages team bonding, and gives co-workers an opportunity to say goodbye. From written messages and gifts to cakes and parties, there are many ways to show gratitude for departing employees. CultureMonkey provided 200 ideas for writing thank-you messages for employees. Kudoboard shared 20 ideas for farewell parties. Indeed compiled ideas for thank you gifts, including company swag, flowers, and gift cards.

“Good departure celebrations focus on appreciation rather than loss. Taking time to recognize someone’s contributions helps maintain positive relationships and shows current team members that their work is valued, whether they stay for years or move on to new opportunities.” – Aaron Whittaker in CEO Official Magazine.

Protect Data Security and Confidentiality

Employers sometimes underestimate how critical it is to quickly protect data from potential risks with departing employees. The process should be coordinated with IT to ensure the necessary proactive action is taken immediately. This includes collecting equipment, keys, and badges, changing all passwords, retrieving intellectual property, deactivating logins and credit cards, and removing the employee from all internal and external sites. A delay of only 24 hours in deactivating an account or changing passwords can result in a major security breach.

A successful offboarding process protects employers and encourages positive relationships with departing employees. Departing employees who are treated with empathy, respect, and appreciation are more likely to promote your brand, refer new talent, and return to work for you in the future.