Should an employer allow an employee to resign in lieu of being terminated?

An employer might want to let an employee exit with a greater degree of dignity by allowing voluntary resignation instead of discharging the employee. This option is most appropriate when no gross misconduct or violation of a major company policy is involved and when the employee is being terminated because of failure to meet performance or productivity standards. The exiting employee may prefer this option because he or she can then tell future employers that the separation was voluntary.

Resignation in lieu of termination, however, will not always remove the employer's obligations for unemployment. Individual circumstances will govern.

If the separation is contentious, proving the opportunity to resign, combined with a termination agreement/release and some type of severance package will help head off legal action. Generally speaking, if an employer treats voluntary resignations in lieu of terminations in the same manner as all other discharges (e.g., with documented performance improvement plans), there should be no greater risk to the employer in letting an employee resign.

Employers pursuing this option need to plan ahead regarding how they will handle future reference-checking inquiries from other potential employers.