Summary:

• Employee termination is a delicate art of upholding company policies and maintaining a good relationship with employees leaving the company. When handled wrong, it can result in legal repercussions.
  
• Having a policy for how to terminate employees is vital. But knowing when to do it is equally crucial.
  
• Use an official Employee Termination Letter when letting someone go. Also, be sure to properly document performance records and calculate final paychecks in your HR & Payroll system.

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Terminating an employee is a challenging yet sensitive process for managers and business owners. It requires a balance of empathy, professionalism, and strict adherence to legal and organizational policies. When handled correctly, it can protect the company’s reputation, maintain team morale, and uphold the dignity of the departing employee. On the other hand, mishandling employee termination can lead to legal repercussions, a toxic work environment, and damage to company culture. 

Here’s a rundown of best practices on what you must do and mistakes to avoid to ensure that your employee termination process is carried out with fairness, compassion, and respect for all parties involved. 

The Dos

Do follow company policy and legal requirements. 

Every organization should have a policy regarding employee terminations. This policy goes beyond a list of paperwork and items that employees need to return before they leave. With this in place, you would have a clear framework and set of steps to follow when letting go of an employee. 

There are several reasons why employees need to be let go, and your termination policy should clearly outline a process for when such conditions are met. Employment typically ends for the following reasons: 

• Voluntary termination happens when employees decide to leave an organization. Once an employee turns in their resignation or notice, the turnover period usually lasts two weeks to a month, depending on what’s stated in your company policies or what you have discussed with the employee.

The steps for when an employee resigns are pretty straightforward. They will be given a list of things they need to return and informed of when they can receive their final paycheck.

• Involuntary termination happens when the employer initiates it, and there are several reasons why employers can do so. First, companies experience changes that prompt them to downsize, let go of redundant roles, lay off employees, implement furloughs, or close the business completely. Second, employees fail to perform or commit major violations or offenses.  

Involuntary termination is more challenging to navigate because more legalities must be accounted for. For instance, is the employee given ample opportunity to improve if the termination is due to poor performance? Was the issue communicated clearly to them? You may be liable under the law if you answer no to both questions. 

Your termination policy should clearly state offboarding processes specific to the nature of the termination. More importantly, every rule should adhere to applicable labor laws to avoid non-compliance and potential lawsuits.

For instance, there are employment laws governing when final paychecks should be released. Depending on what states you operate in, you would need to release the final paycheck on the actual last day, the next scheduled payday, or a specific number of days after the termination of employment. Here’s an updated guide on severance pay and final pay rules for 2024. 

Lastly, this policy should be included in the employee handbook.

Do comply with all applicable termination laws.

The dismissal process is straightforward if an employee leaves your company on their own accord. All you need to do is determine their last working day, prepare the necessary paperwork, provide a list of things and responsibilities the departing employee needs to turn over and issue the final pay. 

However, if an employee needs to go for involuntary reasons, you must take additional steps to ensure a smooth and compliant transition. Get thorough legal counsel to ensure that you comply with all termination laws that apply to your business. In particular, ensure you are following your state’s final paycheck regulations. 

Do document everything

Prepare the necessary documentation ahead of time. While nearly every state in the US adheres to the employment-at-will doctrine, it’s good practice to have a paper trail of performance evaluations and disciplinary records that support your reasoning for terminating an employee. You should also create a termination letter, an official document to notify employees that they are being let go. It must include the reason for termination, effective date, and next steps, such as turning over company assets and releasing final pay.

Termination letters may seem straightforward, but you must be careful when writing them. As an official document, they should stand in court if needed. Ensure that they are factual and include all the necessary information. Here’s a free template and guide to writing employee termination letters.

In addition to the termination letter, it is good to prepare and refer to employment contracts and other vital data that will help the employees understand why they are being let go. If you offer a severance package, discuss what’s included and how it will be computed.

Do have a termination meeting to notify the employee privately. 

Regardless of the reason, it would be best to notify the employee privately that they are being let go. It’s never easy to receive such news, and doing it in front of others will make it even more painful. 

A face-to-face meeting keeps their dignity intact, especially if they are being let go for job performance issues. 

It is important to keep these meetings short, straightforward, and professional. During the meeting, present them with the facts, such as the reason for the employment termination, what company property they need to return, when they can expect their final pay, and other next steps. End the meeting amicably, wish them well, and thank them for contributing to the company. 

Consider recording the meeting to ensure that all your bases are covered. Be sure to inform the employee beforehand that the meeting will be recorded. 

Do have a witness when notifying employees that they are being terminated. 

Having a third party present during the meeting is another good idea, both for the employee and the manager. 

Typically, the witness is a human resources person. HR professionals are well-versed and have the expertise to handle terminations, and it can help frontline managers carry out an otherwise daunting task. 

Do provide assistance when possible. 

Depending on the termination circumstances, consider offering recommendation letters to terminated employees to help them find new employment. This can be an excellent way to end things amicably, especially for team members who are let go because of downsizing or layoffs.

The Don’ts

Don’t dismiss employees without personally talking to them. 

Firing someone is never easy and typically comes as a blow, especially for unexpected reasons like layoffs or something more sensitive like “for cause” termination. 

While a termination letter is, in principle, a tool to notify employees that they are being let go, it’s not advisable to deliver the news through this channel only. Think of it as documentation that makes everything official and prevents legal repercussions. But at the end of the day, it’s merely that—a formality. 

When letting people go, it’s best to talk to them in person before presenting formal letters and documentation. A face-to-face dialogue helps soften the blow, demonstrates respect, and allows employees to ask questions regarding the termination. 

Don’t terminate employees on a whim. 

Termination should always be the final recourse because firing an employee without due process can have legal consequences. Letting people go should never be a knee-jerk reaction to the first sign of financial challenges, unsatisfactory performance, or conflict with other staff.

If a team member is not performing up to par, consider putting them under a performance improvement plan or PIP. A PIP is a documented program to help underperforming staff members improve. If an employee falls short of the goals set under the PIP, then termination should be considered. Here’s a guide and free template for creating a performance improvement plan. 

Even if an employee violates a company policy, firing them on the first offense is often not wise. Make sure that they are given the chance to correct their behavior and provide warnings accordingly. There should also be ample investigation and facts before letting employees go due to offenses like tardiness or conflict with another co-worker.

Also read: 3 Mistakes with Employee Conflict Resolution – How to Avoid

Don’t overlook the right timing. 

When it comes to employee termination, the when is equally important as the how. 

While it seems there’s never a right time to announce that an employee is being let go, it’s still essential to time it well. In some cases, firing people at the wrong time can even result in legal risks. 

So when is it NOT advisable to terminate an employee? When they are on medical leave. While an employee who’s under FMLA leave is not exempt from termination, you need to tread carefully. Certain conditions need to be met before you can let go of an employee undergoing said leave. Make sure to consult with your legal team to handle it properly. 

Other times when it’s not advisable to fire employees include: 

• When they are going through difficult challenges, such as getting diagnosed with a severe illness or getting divorced
• When they are on vacation or about to celebrate their birthday
• During December or January, when they would be dealing with the holidays and the bills that come with it
• During Fridays, because employees may have questions or clarifications. If termination is done close to EOD or on the weekend, it’s not helpful to wait through the weekend before they can get answers or details. Doing it during the midweek is the best way to go. 

Timing is crucial because it can result in a legal issue. However, whether there is a legal risk or not, it’s best to terminate employees with as much consideration as possible. Look into how much your operations could allow and time the termination accordingly. Losing a job is the last thing anyone would want. Make it as manageable for your employees as possible. 

Don’t forget to check in with remaining staff members. 

Employee termination can also affect staff who remain with the company. Ensure you check in with current team members to see how they feel about the situation. 

It’s normal for the remaining staff to feel anxious about their employment, especially after layoffs. Schedule a time to sit with them so you can address their concerns. Use this opportunity to gauge your team’s sentiments and take quick action if you think they are likely to disengage and quit. 

After terminations, it’s best to stay transparent with the remaining team. Have an open-door policy and answer their questions honestly. 

Don’t insinuate that the decision is not final. 

Don’t give false hopes when breaking the news to employees. It has to be clear and direct that they are being let go, and nothing can alter that decision. Don’t allow room for any vagueness or misinterpretation, whether verbal or written.

Don’t part ways on a bad note. 

Terminations, for whatever reason, will never be a comfortable discussion. However, it’s always best to part ways amicably with a departing employee. Even if there’s conflict, it’s pointless to rehash the negative things that happened. At this point, it’s best to focus on the positive sides of their tenure with the organization. 

Say goodbye on a positive note, or at the very least on a professional and civil level. If you think that there’s a risk of violence, have someone nearby to assist you, and don’t engage. 

Workforce.com can help lighten the load of employee termination

There are a lot of areas concerning employee termination, and Workforce.com can help simplify them for you.

Employee termination usually requires extensive documentation of time and attendance, performance reviews, payroll details, and other information related to calculating final pay. Workforce.com can help you gather all of this data and streamline the termination process.

Discover more about how Workforce.com can help you. Book a demo today.