How to Terminate an Employee
By understanding the different reasons for terminating an employee, employers can create a plan that keeps the business both steady and compliant. Here's a look at the two components of involuntary terminations as well as five steps to take before ending a worker's employment.
Involuntary termination of employment can affect morale, productivity, employee satisfaction and more, which makes it critical for HR to follow a process regarding how to terminate an employee. Not only can it affect the business, but legal risks can arise.
Every termination is unique, and there's no magic wand to make it easy. However, by understanding the different reasons for termination, you can work toward creating a termination process that keeps your business both steady and compliant.
Identifying reasons for termination
To determine how to terminate an employee, HR leaders need to first know the reason for the termination. Here's a look at the two components of involuntary terminations: for cause and without cause.
For cause
The main reason for this type of termination would be policy or conduct violations. Depending on the severity of the violation, immediate dismissal or progressive discipline may be appropriate. For example, if the violation constitutes gross misconduct — such as sexual harassment or other discriminatory behavior in the workplace — immediate termination may be warranted.
However, if the employee's violation is minor — such as excessively arriving to work late — a progressive discipline practice may be suitable. This involves graduated steps for dealing with problems related to an employee's conduct or performance, giving the employee notice of the unacceptable behavior and actions to correct it. HR leaders should have policies and practices in place in the event that progressive discipline has failed.
Unsatisfactory performance is another main reason for this type of termination. Egregious performance, such as a major accounting error that resulted in costly penalties, may warrant immediate dismissal. However, when clear performance standards are conveyed, progressive discipline is often the best way to address substandard job performance before deciding to terminate, according to the Society for Human Resource Management (SHRM).
Without cause
Three without-cause reasons to terminate an employee would be medical reasons, a reduction in workforce and them not being a good fit.
For medical reasons, HR may decide that termination of employment is necessary when an employee is unable to return to work after an extended medical absence. However, it is important to keep in mind that employees have extensive protections under federal and state medical leave laws. A best practice is to consult with an attorney before making this decision.
A layoff or workforce reduction is another without-cause reason. Sometimes employers may find it necessary to decrease their headcount due to economic or restructuring situations that are at no fault of the employee. In this instance, layoff decisions may be based on seniority or other nondiscriminating criteria. Severance packages and unemployment benefits are commonly offered to workers when choosing to terminate their employment for this reason.
Lastly, the at-will relationship between workers and organizations allows an employer to terminate an employee at any time for any reason — except for an illegal one (e.g., retaliation or discrimination) or without cause. Therefore, the employer can decide that the employee is simply not a good fit for the job due to any factor, such as personality conflicts that adversely affect the team dynamics. The SHRM advises employers to thoroughly review the situation to identify any hidden bias or unlawful discrimination and document the circumstances before deciding to terminate for this reason.
Whatever the case may be for terminating an employee, it is important to be aware of any federal, state and local legislation that provides workers avenues to take legal action against a perceived wrongful termination.
Steps for properly terminating an employee
To mitigate risks, you can take certain steps before terminating an employee. Here are five important strategies to follow if you find yourself needing to make a personnel change.
1. Create clear expectations
It's crucial to create fair and equitable performance standards, job descriptions, policies and standards that outline clear expectations around employment with your organization. These documents are the groundwork upon which a solid talent management strategy is built. This foundation allows HR to set up new employees for success, manage ongoing employee performance and terminate employment if expectations are not met.
Without this clarity, employees must navigate their roles without direction, which can lead to poor decisions and potentially even unlawful conduct. And, without these standards, it's much more difficult for an employer to make a case for terminating an employee.
2. Communicate and document any performance issues
Before you need to terminate an employee, be sure you have everything in place. That means providing all employees with access to your organization's termination policy as well as training managers and supervisors on the importance of documenting negative performance patterns in a methodical, timely manner. Managers should communicate with employees when performance issues arise. If behaviors continue, they should start recording their observations and statements based on facts.
When relaying performance issues to remote workers, HR should use the most personal form of communication available. Ideally, face-to-face meetings are the first choice. When that's not an option, videoconferencing or a phone call may be the next best method.
3. Identify any protected factors that may create risk
Federal law prohibits employers from discriminating against and firing employees based on the employee's membership in protected classification (e.g., race, color, sex, pregnancy, sexual orientation, gender identity, religion, national origin, age and disability). If there is a reason to believe the termination was a result of membership in any of these classifications, an employee may take legal action after termination against the employer as well as others involved in the decision.
Accordingly, before terminating an employee, HR should evaluate any factors that may be a cause for discrimination and ensure that requirements of employment laws and regulations have been met. In some cases, organizations offer separation packages to reduce risk when terminating employees.
4. Plan and prepare for the termination conversation
By planning and ensuring everyone is ready for what can be an awkward discussion, it's more likely the conversation will go smoothly. Schedule a meeting with a member of the HR team, the employee and the employee's manager. Clarify roles prior to the meeting — the manager should lead a brief conversation, the HR staff member is there to provide support, determine the delivery of the final paycheck (compliance varies by state) and provide information about benefits.
Critical information to convey during the meeting includes notifying the employee that their employment is being terminated, the reason(s) and facts behind the decision and the date of separation. All parties should strive to end the relationship as amicably as possible during the discussion.
5. Treat them with dignity and respect
Even when ending an employee's employment with the organization, make sure the situation is handled respectfully. Before the employee leaves the premises, you'll want to collect any business devices and disconnect their access to the building as well as your organization's electronic network. Allow the employee time to gather their belongings, either directly after the meeting or during a time outside of business hours when someone from the organization will be present to assist and observe.
When the end of a worker's employment is handled with care and these basic steps are kept in mind, leaders are less likely to make missteps or encounter pitfalls. HR must follow a process regarding how to terminate an employee to not only avoid risk but also to ensure employees are treated fairly.
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