Terminating Employees: Three Key Guidelines to Ensure a Smoother Departure

Stress

When owning or managing a company, having to terminate employees will likely be inevitable, and it can be one of the worst parts of running a company.  No one likes to receive or deliver such news.  That said, following these three guidelines will make the termination process smoother both the employee and the employer.

1. Consistently Communicate and Maintain Records

In almost all states, employment is at-will unless the employee executes an employment agreement that contracts for a set term of employment.  The at-will doctrine provides an employer the right to terminate an employee at any time, without cause, reason or advanced notice, while the employee can likewise leave the company at any time, without reason or advanced notice.

However, when an employer terminates an employee for no specific reason, it opens the door to the employee believing and/or claiming that he or she was terminated for an improper or illegal purpose.  Therefore, to start, it is important that the employer delineate expectations for the employee. When those expectations are not met or policy is violated, it immediately should be addressed with the employee.  A tool used by many employers is the Performance Improvement Plan (PIP), wherein employee expectations are outlined in writing, along with a stated timeline for improvement, and regular meetings are held with the employee to monitor progress.

When employees are failing to perform, sometimes verbal warnings are most effective in the beginning, but it is helpful to maintain record of these verbal warnings via documentation. This way the company can maintain track of the employees’ progression despite, for example, any company turnover or transfer of management. Documenting failed performance, whether it be through verbal or formal written write-ups, should be done contemporaneously, to assure a clear and consistent message to employees. Using a form approved by legal and Human Resources (HR) is also recommended. Having the employee review and sign the documented write-ups is another way to assure the message is clear.  It also makes it difficult for the employee to later dispute that they were given warnings related to their performance.

2. Do Not Rush to Terminate

When the violation of company policy is extreme and/or rises to the level of illegal behavior, the decision to terminate may be made very quickly. However, the company should take the time necessary to assure it documents the violation/behavior, consider obtaining witness statements, make written record of all witnesses to the behavior, and/or involve the police (who will take their own written statements), as appropriate. There may be times when the company will need to investigate to assure it has all the facts it needs to support the termination, and in certain circumstances it may be a good idea to suspend the employee while the company conducts that investigation. Should there ever be a challenge to the termination down the line, this evidence will be critical.

More often, the termination decision will be made based on continued failure to perform. In these situations, the decision to terminate should be well thought out and approved by the appropriate authority at the company (HR and legal). The employer will want to assure that the termination is being done properly. For example, in California, the company must have the employee’s final check ready that same day. In other situations, you may want to provide the employee with a severance and release agreement (that should be drafted and/or approved by your counsel), which can work to limit future liability for the employer.

3. Hold a Final Termination Meeting

Most times, the employer will want to meet with the employee in person to advise them of their termination. The company should always have at second witness present for the meeting when this message is relayed. The witness should be a member of Human Resources, the employee’s manager or someone else in management (i.e. operations, director, owner, etc.). This will allow for one person to relay the message to the employee while the other takes notes of the meeting. It will also prevent any risk that the employee later fabricates events occurred, or statements made during that meeting, in support for a later filed harassment, discrimination, retaliation or other employment lawsuit.

The meeting should be held in a private office, conference room, or a location where there is not an audience of the employee’s peers. The employee should be briefly advised of the reason(s) for the termination (failure to improve under the PIP, violation of a certain company policy), and reminded if the issue has previously been discussed with them. The message should be direct and to the point, and the meeting should be no more than 10 to 15 minutes. If there is any concern that the employee may be aggressive upon learning of his/her termination, the company may wish to have security present to escort the employee out of the office, and/or to be present while the employee collects his/her things before exiting.

In sum, taking the time to assure these steps are followed and put into regular practice, will greatly increase the company’s chances that the employees will succeed, if possible, through proper communication and coaching. However, if, at the end of the day, the employee is not the right fit, these guidelines will protect the employer should they need to move forward with termination.

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