It is the situation that business owners and HR personnel dread: when it’s time to let an employee go. They simply aren’t fulfilling their job responsibilities and/or they are having trouble working as part of the team. What steps need to be undertaken to terminate the employee in a dignified way, and in a manner that protects your company from monetary damages, a sullied corporate image as well as wrongful termination lawsuits?
- Consult an employment attorney. This is particularly the case for smaller businesses that have fewer employees and less experience with terminations. But even multinational large businesses should run the specifics of every termination by their employment law team. But by all means, do not begin the termination process until your attorney gives you the go-ahead.
- Check your own company handbook and be sure that you are abiding by what you have distributed to your employees. If your own handbook has prescriptive measures or probationary periods, you better have followed the directives that your own handbook says. Some handbooks even have a step by step process outlining termination procedures including meetings with supervisors that have to be documented and followed up on..
- Prepare the personnel file and get your documents in order. If you have “written up” an employee, be sure that document or email is printed and placed in a personnel file, as well as documents summarizing dates and times of phone conversations and the nature of those phone conversations. Any other company documents, especially those signed by the employee, like a periodic review or goal setting sessions also are important documents. Conversely, these documents could become part of a retaliatory lawsuit if the employee consistently received good reviews and had no documentation of inappropriate work behavior or non-productive work time.
- Ascertain if you are being fair. If an employee is being considered for termination based upon information that another employee furnished, you better ensure that the informant stands nothing to gain from the termination. And if you are terminating an employee for an infraction (missing work after vacation time), then you better make sure that you haven’t let other employees slide for the same infraction whom you liked a little better or had a bit more seniority.
- Make sure you are not breaking the law. Your employment attorney can help with this. Some obvious no-nos include discrimination based upon race, religion, nationality, age, disability (including pregnancy), status as a veteran and in certain states, sexual orientation.
- Determine if you are firing a high-risk employee. Has this employee had access to trade secrets? Does this employee have many company passwords and access to sensitive information? Has this employee accused anybody in the firm of harassment or improper behavior? All of these cases make a firing more complex, but not impossible. Proceed with caution, with careful planning and with expert legal advice.
- Get your ducks in a row. Determine at what time of day you are going to fire someone and who will be in the room with you (or on speaker phone). Determine your script, exactly what you will say and how you will escort the person to their office or out the door. Make plans to acquire the employee’s computers, phones, tablets and office keys. Disable their passwords and corporate email. Be prepared to change any locks if applicable. Decide how and when the employee’s office space will be cleared out. Make a decision about how you will tell other employees about the termination.
- Prepare your paperwork. Arrange for a final paycheck which includes any unused vacation or sick time, as well as any appropriate severance pay. If it is appropriate, bring along a vague reference letter for future employers. Prepare a separation agreement, the signing of which is contingent upon receiving said check. Included in the separation agreement can be requests not to badmouth the employer (or employee), as well as delineating who in the company can be contacted as a reference (if any).
Consider the trade-offs: Whenever you are thinking about letting an employee go, you should also contemplate the hypotheticals. If the employee has imperfections (and all do), are there prescriptive measures that you can take to improve his or her productivity or rapport with co-workers or supervisors? Other things that might impact your decision include:
- The effect of the termination on other employees. If the fired employee is popular, what will the impact on morale be with her termination? Will other employees fear for their own job security and begin to look for employment elsewhere? Will there be a culture of fear and will employees change from speaking honestly to acting like sycophants?
- Loss of confidential or proprietary information. Are there effective non-compete clauses or is this employee able to do damage to your bottom line if hired by a competitor?
- Damage to the company’s reputation. How will you handle the story of how you and this employee parted ways? Will it be perceived in the marketplace that your business is unethical, volatile or unstable?
- The costs of turnover can be high. Depending on your industry and the skill specialization of the employee, there may be significant costs of turnover, including the time and paperwork it takes to complete the termination process, the time it takes for the job search process, working in the interim “a man down” and the training costs and learning curve time for a new employee. Even if you hire from within, you will still have a job opening somewhere and others will have to take on different responsibilities