Termination Policy: What To Include?

The employee lifecycle is incomplete without a well-thought-out termination policy that lays out expectations for exiting employees as well as the business entities they exit. After all, these stakeholders will continue to be associated together forever, even if the period in question is only brief. A good termination policy covers all the possibilities of incidence under which employee-employer associations come to an end and charts out the map of possibilities for the future. This can include possible rehiring, maintaining a mutual network of talent, or more. In the larger picture of talent management and competency restructuring, the termination policy clarifies to all parties how to conduct themselves from the moment a separation decision is made (by either party) to well into the future where a group of employees and erstwhile employees can form the foundation for a potential advocacy group for an employer’s brand.

By now, it is clear that the termination policy is a comprehensive, widely-shared document that covers a variety of scenarios to the very conclusion of separation proceedings. It is crafted with the help of HR Generalists and specialists in the talent acquisition, management, and retention domains, in addition to functional heads. It combines wisdom by being extremely detailed and particular on policy and procedures.

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A termination policy divides up essential tasks and action items for every one of the stakeholders to make the turbulent time of separation less error-prone and ambiguous.

Tasks for the functional hierarchy: The line manager is usually the first person who is informed of a resignation. In fewer cases, this functionary may initiate a separation in view of performance issues, culture compatibility issues, or some other reason. It falls upon the manager to find out the reasons for a departure wherever relevant and follow it up with one or several rounds of retention efforts. Among other considerations, attrition among team members is of direct relevance to line managers and divisional heads, in addition to the Human Resource (HR) department. These are outlined in detail in the termination policy.

Tasks for HR: The HR department is informed directly by the exiting employee of their decision to resign. The retention efforts, led by line managers or their superiors, are underpinned by HR insights on the suitability of the employee staying on in a role augmented in some way, or in a possible laterally-placed role. Factors ranging from direct productivity to cultural fit and other aspects of the employee’s personality and the larger picture of the team and division have a bearing on the retention effort. These are covered in clear terms in the termination policy.

In the event of a failed retention attempt, the termination policy goes on to map out the duties of administrative staff, allied departments, and stakeholders in proceeding with the exit. Software and hardware assets are recovered from the employee after a fashion guided by the policy and access cards and credentials are deactivated at the end of the notice period.

The question of the notice period brings to light whether:

  • the employee has any leave to be encashed or used up in lieu of the number of notice days to be served;
  • the employee has to train a replacement or offer knowledge transfer to some other team member to take over after they leave the organization;

Tasks for employees: The termination policy thrives on transparency; it outlines the exact duties of the employee and the order to do them in. Several companies make this termination policy available to employees as part of the employee handbook or via the employee interface and intranet.

Since the termination policy is made aware to all the employees well ahead (ideally at the time of onboarding itself), they are aware of the fallouts of retrenchment decisions due to a pervasive economic situation or performance issues. All the details are addressed in a termination policy. By making all the requirements and compliance norms upfront and unambiguous to both employers and employees, the termination policy is compliant with the labor code of the country and region as well as any special statuses under which the employee falls.

Reference: Termination Policy: What Do You Need to Include? | AIHR Digital | Tess C. Taylor | May 2021

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