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Terminating Employment: Six Steps to Help in the Process

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The decision to terminate an employee is never easy and is usually a last-resort measure. But unfortunately, termination may be inevitable. To avoid legal problems down the road, you should establish a set approach to employee management that includes procedures for firing an employee. The following six steps can help you effectively handle terminations.

First: Document

Set out reasonable expectations from the beginning. When a new employee first starts, provide them with a job description that clearly defines their responsibilities. They should also receive a copy of the company’s discipline policy and code of conduct, if you have one. By providing this information up front, you can establish a framework to evaluate the employee’s performance and provide discipline if necessary.

Conduct regularly scheduled performance evaluations. The employee’s orientation should also set a timeframe for a performance review. Keep hard copies of all performance reviews in the employee’s personnel file. Reviews should not be inflated or inaccurate, and should give the employee an opportunity to improve if necessary.

Enforce company policies consistently. Whether or not your business has a written manual for company polices, establishing a pattern is crucial. Be sure to retain written copies of warnings and violations in the employee’s personnel file. Finally, whatever the company’s discipline policy is, apply it to each employee the same way. These steps show a pattern of fairness and willingness to work with employees before turning to termination.

Second: Address Legal Matters

Consult an employment attorney. Since employment laws can vary from state to state, the advice of a good attorney can help you to avoid a legal entanglement. It is important to consult them before – and not after – the termination.

Prepare for a discrimination defense. A well-documented history of non-performance can show that the decision was made for legitimate job-related reasons and not based on the employee’s protected class status such as age, sex, race, religion or disability.

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Third: Plan Ahead

Prepare for everything before the termination meeting. It is important that the employee fully understands why they are being terminated; therefore, it is a good idea to rehearse the meeting beforehand. Prepare by reviewing the employee’s file and writing out the specific key points and facts that are pertinent to the situation.

If appropriate, draft a termination agreement for the employee. This agreement should state the effective date. It should also inform the employee about their final paycheck, accrued time off and the status of their benefits. Some states require the final paycheck and payment for accrued paid time off to be delivered at the time of termination. If the employee subscribed to health insurance, provide them with COBRA (post-employment insurance) options. For employees participating in 401k plans, provide either a completed disbursement/roll-over form to sign at the meeting or the contact information of the plan administrator.

Fourth: Evaluate Security Concerns

Compose a list of company property and access to files. Determine what company property the employee has and any files they can access. If necessary, change the passwords to essential files and programs. If the employee was privy to trade secrets or other confidential information, consult an attorney about non-compete and non-disclosure covenants.

Fifth: Conduct the Meeting

Schedule the meeting at an appropriate time. It is best to schedule the meeting for either early in the morning or late in the afternoon. Also, if possible avoid terminations around major holidays or birthdays. Most importantly, schedule a third party to be present at the meeting to serve as a witness and take notes.

Stick to the facts. The termination is a business arrangement and must be handled professionally and promptly. Inform the employee about the reasons for the termination, sticking to the facts that were prepared beforehand. Treat the employee with dignity. While it is acceptable to answer some questions from the employee, do not engage in a debate. Emphasize that the decision is final.

Wrap up. Make sure the employee returns all company property and signs all of the necessary paperwork. Place a copy of the meeting notes and the termination agreement in the employee’s personnel file. Allow the employee time to gather personal belongings.

Sixth: Post Termination

Handle references carefully. When giving references for terminated employees, it is acceptable to provide only the dates of hire and termination, position and salary. A careful reference can prevent accusations of defamation.

Confidentiality is key. Terminating an employee can spark rumors, so inform other employees formally and factually, but avoid questions regarding the details. Additionally, vendors and suppliers who were in contact with the employee should be informed in a similar fashion.

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