How Transparency Around Termination Can Protect Your Business
If employers don't follow necessary termination guidelines prior to termination, employers may face wrongful termination suits from disgruntled employees.
Delivering bad news to someone on your team is never easy. According to management consultant Dick Grote, terminating employees is "the single most difficult thing we ask leaders to do." This is why having termination guidelines in place can be so useful, paired with the notion that termination should come only at the end of a reasonable and transparent history of conversations Ñ and documentation Ñ surrounding problematic employee performance.
But it goes beyond fairness. When employers fail to take these necessary steps prior to termination, according to Business Management Daily, they risk facing unwanted wrongful termination suits from employees who may think they were treated unfairly.
So how can you help protect your business if you need to terminate an employee? Here are four key termination guidelines to follow.
Maintain an Employee Handbook
Employers should maintain a current employee handbook, distribute it to all new employees and have them acknowledge receipt in writing. Handbooks should identify the expectations of the employer, including job expectations and disciplinary policies. Make sure to have your employee handbook reviewed by counsel for both industry specifics and local laws. An incomplete or boilerplate handbook could potentially set some unexpected legal traps for employers without providing the protection originally sought. For example, an incomplete handbook could mean your business fails to include mandated written notices to employees.
Establish a Progressive Discipline Policy
Consider setting up a progressive discipline system where the severity of the penalty increases each time an employee violates a company rule or policy. It's important to follow through and make sure that your managers enforce this system consistently, which will help protect the business.
The discipline policy should explicitly allow the employer to skip the progressive discipline steps and proceed straight to termination. It would be prudent to include a non-exhaustive list examples of egregious acts, such as embezzlement, stealing property and the like.
Any instances of poor performance or violations of company policy need to be documented, as well as acknowledged by the employee. This way, the employee can't claim ignorance or accuse you of misleading them. If an employee refuses to sign an acknowledgment, simply note that on the document and include in their performance file. A copy of the documentation should be placed in the employee's file. Proper documentation can help employers who are later required to respond wrongful termination complaints.
Know How to Run the Termination Meeting
After completing all necessary preliminary steps, it's time for the termination meeting. During the meeting, it's best to have at least two people in the room, including one representative from human resources. It's prudent to document the meeting, too, in case the soon-to-be former employee challenges the termination. Also consider consulting with local counsel.
Your words should be straightforward and transparent about the true reason for termination, according to the Harvard Business Review. If the employee is misled about why they were terminated and they discover the truth after the fact, they could claim that the reason served as pretext, putting the burden on the employer to prove nondiscriminatory rationale, as Entrepreneur notes.
While dealing with problematic employees is difficult, don't delay disciplining or terminating a poorly performing employee, especially if they're damaging the business. Nobody wins when you withhold transparency and allow problems to worsen. And it's a wise habit to maintain honest and fair relationships with everyone in your business, even with employees who don't work out.