Workforce Changes in GovCon: Termination and Rehire Best Practices
In today’s shifting GovCon environment, workforce stability is more uncertain than ever. Contract delays, funding fluctuations, and shifting agency requirements can lead to unexpected terminations and subsequent rehiring needs. Navigating these changes effectively requires careful planning to minimize disruption and ensure compliance. Below are key factors to consider when terminating and rehiring employees in the current climate.
- Employment Status & Rehire Process
Before bringing an employee back on board, determine whether their rehire qualifies as a continuation or new employment.
- Break in Service: If there was a significant gap in employment, a new offer letter and start date may be required.
- Onboarding Requirements: If the break was short, employees may not need to repeat I-9 verification, background checks, or other onboarding steps.
- Handling Severance & PTO Payouts
When rehiring a previously terminated employee, it’s important to address severance pay and paid time off (PTO) considerations.
- Severance Pay: If severance was issued, it typically cannot be recouped unless the company’s policy explicitly allows for clawbacks. Additionally, employees who received unemployment benefits may have eligibility implications upon rehire.
- PTO Payout: If PTO was cashed out upon termination, employees generally are not required to repay it unless a written agreement states otherwise.
- Accrual Adjustments: Companies must decide whether to reinstate prior PTO balances or start fresh. While reinstating is employee-friendly, it can be costly. In some cases, allowing a temporary negative PTO balance—especially in states with specific sick leave laws—can be a fair compromise.
- Communication & Offer Letters
Clear and transparent communication helps set expectations. When rehiring, it’s essential to:
- Clarify the reason for rehire, particularly if it’s due to contract reinstatement.
- Provide an updated offer letter detailing:
- The effective start date.
- Position details (whether it’s the same role or has changes).
- Any updates to salary, benefits, or PTO accrual.
- Benefits & Payroll Considerations
Rehiring also affects benefits and payroll, requiring close attention to administrative details.
- Benefits Reinstatement: If an employee’s medical, 401(k), or other benefits were terminated, check whether reinstatement can occur without a waiting period. Depending on timing, some benefits may still be recoverable before they lapse.
- Payroll Setup: Ensure HR and payroll systems correctly process rehired employees to prevent duplicate records or errors. Be mindful of prepaid insurance premiums to avoid double deductions.
In the end, navigating the termination and rehire process requires strategic planning and compliance with company policies. By addressing employment status, severance, PTO, communication, and benefits considerations upfront, businesses can ensure a seamless transition for both the organization and the returning employee.
BOOST can help streamline these processes and support your workforce management needs. Need guidance? Reach out to our team today!
About The Author, Amanda Martin
Amanda Martin is a seasoned GovCon recruiter with over 11 years under her belt. With a deep understanding of the government contracting landscape, she has a knack for connecting top talent with the right opportunities. Whether you’re just starting out or looking to level up, her tips and stories from the recruitment world are sure to help. Follow along for some valuable insights and a few laughs!
