What is Employee Resignation?

Saying goodbye is always hard, and it can be tougher when a talented team member decides to leave your organization. However, this is a normal part of business. In fact, in 2021, during what is known as “the Great Resignation,” 47.8 million American workers quit their jobs. And in 2022, 44% of workers were looking for different work. 

Read on to find out what you need to know about employee resignation, when you need to worry, and how you can make the process a little easier.

What is an Employee Resignation?

Employee resignation means a worker voluntarily leaves their job. A worker can submit a written notice that they’re quitting, or they may simply tell their employer or manager that they’re leaving.

Sometimes resignation is known as “giving notice.” It’s traditional for workers to give employers two weeks of notice, but this is not required by any federal or state law, even if an employee handbook asks for a notice period. Most employment in the United States is “at will,” so workers have the right to walk away at any time, for any reason.

Why Does Employee Resignation Happen?

Workers quit their jobs for many reasons. Some of these may not be a reflection of your company at all, while others could be an indication of problems in the workplace. Here are some examples of why people quit their jobs:

• Personal events, such as a move, illness, or divorce: Life changes can significantly impact an employee’s ability to continue in their current role, necessitating a resignation.
• Unhappiness at work: Dissatisfaction with the work environment, job role, or colleagues can lead an employee to seek employment elsewhere.
• A new job offer or opportunity for a career change: The prospect of a more appealing position in terms of responsibilities, pay, or career growth can lure employees away.
• Burnout: Chronic workplace stress and lack of work-life balance can result in burnout, causing employees to leave their jobs.
• No longer feeling aligned with the organization due to changes in management or policies: Shifts in company direction or values can create a misalignment with the employee’s beliefs or career goals.
• Interpersonal conflicts: Disagreements or clashes with coworkers or management can make the workplace uncomfortable, prompting a resignation.
• Boredom at work: A lack of challenging or engaging work can lead to boredom, causing employees to seek more fulfilling opportunities elsewhere.
• Lack of adequate training: Without proper training, employees may feel underprepared and overwhelmed, leading to their decision to resign.
• A strong labor market: A robust job market offers more opportunities and can encourage employees to explore other options.
• Poor workplace safety: Concerns over physical or psychological safety at work can compel employees to leave their jobs.
• Toxic company culture, bullying at work, or harassment: A toxic workplace culture, such as bullying and harassment, can drive employees to resign.
• Not being on the same page as a manager or supervisor: Misalignment with management in terms of expectations, values, or communication style can lead to frustration and resignation.
• Lack of advancement and new opportunities at the company: If employees feel their career is stagnating, they may look for advancement opportunities elsewhere.

Is Employee Resignation Good or Bad for Business?

Every resignation is different. There are certainly some drawbacks to a worker leaving:

• You lose talent. The most immediate impact is that you have one less employee. On smaller teams, especially, this can mean a drop in productivity.
• Turnover is expensive. The cost of employee turnover is high, and replacing an employee can cost from half an employee’s annual salary to two times a worker’s salary. The costs are even higher for executives.
• It can be disruptive to your team and company culture. Remaining workers may need to pick up extra work. The person leaving may have friends at work who feel adrift or even start questioning their own place in the company. Research also shows that sometimes one or two resignations can spark a mass exodus.

On the other hand, there are some benefits to an employee resignation:

• It can save you a termination. If a worker is unhappy because they’re not a great fit, or if their performance is not up to your standards, the employee leaving without pressure from management can be a good outcome.
• It can improve your company culture. If a toxic or unhappy employee leaves, it can actually boost morale and create a more pleasant workplace for everyone.  And if you handle resignations with grace, it shows candidates you’re a great organization to work for.
• It opens new opportunities. When an employee leaves, you can hire workers who bring new enthusiasm, ideas, and skills to your business.

So, when is employee resignation a problem? Ultimately, you may need to ask the employee to find out. During the exit interview, ask a departing worker whether they were dissatisfied at your organization.

This can help you address issues before more people leave. If multiple people quit around the same time, pay attention. You may need to investigate and make changes to create a workplace where people want to work.

What Laws Does My Business Need to Know?

If your company doesn’t have one already, work with an employment lawyer to create a process for resignations. There are state and federal laws you need to be aware of relating to:

• The final paycheck. If an employee resigns voluntarily, you must give them their last paycheck on or before their next regular payday. Check local regulations for other restrictions. In some states, you might even have to give your former worker their last paycheck in as little as one to four days. In some states, including California, paid time off (PTO) needs to be paid out in an employee’s final paycheck, too. In other states, workers lose out on PTO if they quit.
• Company property. Some states allow you to hold back part of the worker’s final paycheck if they haven’t returned company property.
• Health insurance. If you have at least 20 workers, the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) requires you to continue to offer group health benefits to an employee, and possibly their spouse and dependents, after they leave.The amount of time your former employee can stay on the group plan varies, but it can be up to 18 months. Workers pay the full premium for the group health plan if they decide to use their former employer’s health insurance plan. Some states have different plans that offer more coverage than COBRA.

What to Do When an Employee Resigns

Even before a worker quits seemingly out of the blue, you should be ready with policies and practices for resignations. Some companies escort a worker from the premises as soon as they quit, changing passwords and cutting up ID cards immediately. Other organizations have a softer transition, hosting a goodbye party and letting an employee work until they start their new job. 

What you will do when a worker leaves depends on the situation and your company culture. Whether the resignation has created an unpleasant situation or whether it was amicable and friendly for everyone, you’ll need to follow these basic steps.

Get the worker’s decision to quit and their exact departure date in writing. If they haven’t already, ask them to submit an email or letter outlining their plan. A more formal option is to send the employee a separation notice, outlining their separation and their final day worked.

Sometimes, such as when an employee gives notice ahead of time, it will be possible to work with them to determine what they’ll do in their final days with your company. It can be valuable to use this time to train others or catch the team up with the employee’s projects.

Alternately, if an employee who is causing problems has resigned, you may want to tactfully tell them that while they will still be paid, they do not have to come in to work for their final two weeks. 

Add details about the resignation to your employee’s file. Process the employee’s final paycheck according to local and federal laws. Contact any insurers or third-party benefit providers to let them know about the change, too.

Let your team know about the change as soon as possible, especially if you have a small, close-knit organization. This can help quell any rumors and lets colleagues stay in touch with the departing person if they want to. 

Talk to your IT person or department so they can make sure the employee returns devices such as a computer or cell phones, close accounts, change passwords and permissions, as needed. This is important to maintain security.

Reach out to managers to find out if the departing employee’s position needs to be filled. If so, start planning your recruitment strategy.

Keeping it friendly keeps doors open—after all, up to 4.5% of new hires are boomerang employees, aka people who return to a former employer. Thank the employee for the time and energy they have put into your company. If you can provide a strong reference for any future job searches, let them know. 

If appropriate for your company culture and the situation, host an online or in-person  celebration to give everyone on the team a chance to say goodbye. 

If you can, have a discussion in person. Find out what made the worker leave and review any final loose ends. For example, discuss whether your employee was unhappy in their role. An interview also lets you clear the air if you felt blindsided by the resignation letter. 

If you can’t schedule an in-person exit interview, it may work to get in touch with the employee via email or chat before the employee’s last day.

Tips for a smooth employee resignation

As part of a clear and established process for dealing with resignations, here are some useful best practices.

• Be prepared to continue work. Keep all work documents and forms on a centralized platform, such as Connecteam’s Knowledge Base, so you can see at a glance what an employee was working on. This will help management easily access their files and project details and assign their work to another team member so your company can continue to offer great service to your clients.
• Have a packet of information handy for the employee who is leaving. The employee should have printed materials about their options regarding any company group insurance and any health savings accounts (HSA) or flexible spending accounts (FSA). 

  This information should include options about reimbursement and any possible continuation of these programs after your worker leaves. Review any relevant details about employment contracts or non-disclosure agreements signed. Even after your worker leaves, these contracts may determine where they can work and what they can or cannot say about your company.

• Have a checklist ready for managers. Make sure managers know what company property (such as laptops or keycards) to retrieve, who they need to tell about a resignation, and what project information they need to secure from someone who’s quitting.

What Happens When Resignations Don’t Go as Planned?

Ideally, your exiting employee will come to you and announce that they’ll be leaving within a set timeframe. It’s much more difficult if a worker simply fails to show up for work and refuses to answer calls or emails. This qualifies as job abandonment. 

If this happens, reach out to the employee to try to find out what happened. If you don’t hear back, you can send a separation notice, outlining the last day worked. Or, you can send a notice to the employee that they are fired. 

There are no federal or state laws defining when a worker is considered to have quit after they stop contact. Many organizations have a three-day rule: if someone doesn’t show up for work and doesn’t get in touch with anyone for three days, then they are automatically terminated.

Another non-traditional resignation can happen if a worker who is about to be terminated gives notice before being fired. In at-will employment, you can still choose to fire the worker after they give notice.

When an Employee Walks Away

The faces at your organization will change, and it will not always be your choice. Being ready for resignations can make the process as smooth as possible and help you retain remaining workers. Being able to work with departing workers amicably also helps you build your brand as a great employer.