Understanding Voluntary Termination: Key Insights and Processes
Voluntary termination primarily refers to an employee’s decision to leave a job of their own accord. This stands in contrast to layoffs or firings, where the decision to end employment comes from the employer or another party rather than the employee.
Voluntary termination can also apply to the elective cancellation of personal financial agreements, such as car leases or cell phone contracts, or larger institutional contracts like credit default swaps and interest rate swaps.
Key Takeaways
- Voluntary termination occurs when an employee makes the decision to leave a job or end a contract early.
- It is different from being fired, laid off, or downsized, as the decision is made by the employee, not the employer.
- Some companies may ask for voluntary resignations during downsizing, offering incentives like better exit packages which can include bigger payouts or extended health insurance benefits.
- Electing to end a contract early, like with an Internet provider, also qualifies as voluntary termination.
Motivations Behind Voluntary Termination
There are numerous reasons why an employee might choose to leave a job, including changes in personal circumstances such as family commitments, opting to go back to school, dissatisfaction with current working conditions, or seeking better job opportunities that provide higher remuneration or improved career prospects.
During times of economic prosperity, the likelihood of employees leaving for superior job prospects increases. Conversely, in recessionary periods or when a company faces financial strain, voluntary resignations may be encouraged as a strategic move to reduce the need for layoffs, often accompanied by a more attractive exit package for those who resign voluntarily.
It’s worth noting that quitting a job voluntarily generally disqualifies the employee from collecting unemployment insurance unless the reason for resignation is deemed to be a “good cause,” such as unsafe working conditions. Eligibility for unemployment benefits may vary based on location.
The idiom that employees “leave jobs due to supervisors,” highlights how significant management conflict, lack of respect, or poor communication can be in an employee’s decision to resign.
The Process Involved in Voluntary Termination
Voluntary termination typically begins with the employee notifying their supervisor through either verbal or written communication of their intent to resign. In situations where an employee doesn’t show up for work for three consecutive days without notification, it may be deemed job abandonment.
Employees are generally expected to give at least two weeks’ notice before their last day of work. This notice period helps the company start recruiting a replacement and allows the employee time to transition smoothly.
Upon submitting a resignation notice, it is forwarded to human resources along with the planned end date and resigning reasons. The HR department will then process the final steps which might include asking the employee to return company property, submit final expense reports, and review post-termination benefits. Additionally, an exit interview might be scheduled.
Companies undergoing downsizing sometimes request voluntary resignations to limit forced layoffs. Employees who agree may receive better exit benefits compared to those ultimately subjected to layoffs.
Special Considerations
Voluntary termination isn’t limited to employment; it may also concern cancelling personal or institutional financial contracts, like cell phone plans. Whether or not penalties apply to such cancellations can vary. When a penalty is present, individuals will need to evaluate if the benefit of terminating the contract outweighs the penalty incurred.
Related Terms: termination, unemployment, resignation process, employment benefits.
References
- Corporate Finance Institute. “Voluntary Termination”.
- NOLO. “Unemployment Benefits: What If You Quit?”
- U.S. Department of Labor. “How Do I File for Unemployment Insurance?”
