How to Terminate Employees — Tips for Firing Employees

One of the most important, but absolutely worst parts of management is being responsible for terminating an employee. Firing someone is hard, unpleasant, and uncomfortable. Like anything else, there are definitely right ways and wrongs ways to go about it. Here we’ll show you how to terminate employees the right way.
How to Terminate Employees the Right Way
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Firing someone is never fun. It’s even more difficult when you’ve built a relationship with that person and you’ve become friends with them and their family. Unfortunately, there’s no easy way around termination. With that said, there are definitely best practices to follow when you decide to let go of an employee. Here we want to break down how to terminate employees the right way.

We break this article down into three distinct sections:

  1. Types of termination
  2. What to do before, during, and after terminating an employee
  3. When a termination is illegal

Follow the sub-steps in each of these sections to make sure you terminate employees the right way.

Types of Termination

Termination for Cause

Termination for cause means some aspect of the employment contract between you and this employee or company policy was not followed by the employee and it caused some sort of harm (or risked harm) to the employer. When terminating the employee, the cause for termination should be clearly stated in the termination letter given to the employee. Employers are also allowed to withhold benefits from the terminated employee and are not required to give a certain amount of notice before the termination.

Termination At-Will

If the employment contract states that this employee is under an “at-will agreement”, then the employer can terminate an employee at any time and is not required to give reasons. Some states have outlawed this action in order to protect employees from unfair labor practices, so be sure to understand what you can or cannot do in your state.

Voluntary Termination

When an employee writes a letter of resignation, this is considered a voluntary termination. It is also considered voluntary if the employee doesn’t show up for their scheduled shifts for three consecutive days and doesn’t contact their employer.  

Involuntary Termination

Any termination that is not decided or controlled by the employee, is considered involuntary. This includes termination with cause, without cause, or layoffs. 

Layoffs and Downsizing

A layoff happens when an employee is terminated, either temporarily or permanently, for reasons that are not related to the employee’s performance. The most common reason for layoffs are when a company is downsizing or doesn’t have a large enough budget for that department.

Before Termination

Ensure expectations are and have been clear

Expectations are critical to everything in life but play an extremely important role in job performance and job satisfaction. When you hire an employee for a specific job, their job description should be reinforced with training and plans for what is expected of them. This way, when it comes time to have difficult conversations about performance there will not be any surprises.

Unfortunately, many businesses struggle to operate this way. Sometimes it’s because the business doesn’t know how to properly define performance expectations when they hire someone (this is common when it’s the first time the company has ever hired for that particular position) and sometimes it’s because the business just doesn’t make it a priority.

Whatever the case may be, we strongly encourage you to set expectations with employees early and revise and adjust them throughout the employee’s tenure with the company.

"We strongly encourage you to set expectations with employees early and revise and adjust them throughout the employee’s tenure with the company."

When done properly, this will put you and an employee on the same page when it comes to reviewing performance. If the employee is not meeting expectations, it should be as obvious to them as it is to you.

Assign employees to performance improvement plans

When an employee falls below expectations for an extended period of time, thoughts about termination will begin to creep into your mind. When you begin thinking this way, we find it valuable to share this with the employee in question. By sharing your thoughts and disappointment about performance with the employee, they’ll know they need to make changes in order to keep their job.

While sitting down with the employee, create a performance improvement plan (PIP) together. Specify areas of work where you need to see improvement. Help the employee develop a plan for how they’ll improve. Make expectations clear. Make sure the employee is equipped with the knowledge, tools, and support they need to succeed. Have both sides agree to the performance plan and then monitor it closely.

Need help tracking and documenting employee performance? Eddy’s got you covered!

Consider a succession plan

If you don’t see an employee improving after creating a PIP, you’ll know that it’s time to move on. One thing to consider before you do is whether or not you’ll need an immediate replacement. It can take one to three months to fill a job, and even longer if that job is for a more senior position. Ask yourself if your company will be better off with an under-performing employee occupying the position while you search for a replacement, or if you can have other employees absorb the work until someone new is hired.

Make sure it passes the “jury test”

A Harvard Business Review (HBR) article says that before making the decision to fire an employee, you should ensure that you’re on solid ground in terms of the termination being properly justifiable. The HBR article states, “Assume that you are on the witness stand and the employee’s lawyer is attempting to prove that the firing was unjust, unfair, or vindictive. Look for anything that could be twisted to suggest that the real reason for termination is not the individual’s performance but rather a pretext or a personal grudge.”

The risk of a lawsuit will be greatly diminished if you follow the first few steps by setting and communicating expectations. Being open, honest, and upfront to the employee throughout the entire process will help them understand that they’re being terminated for performance reasons and nothing else.

If for whatever reason you’re considering firing an employee for reasons outside of under-performance or clear policy violation, you should likely reconsider.

Schedule a time

Once the employee has failed to make the necessary improvements as outlined in their PIP agreement and after you’ve thought through the “jury test”, you’ll be ready to proceed with the firing.

To do this properly, you’ll want to schedule a time. Don’t just walk over to the employee’s desk and tell them they’re fired in front of all their co-workers. Schedule a time (end-of-day is best) where you can speak with them privately and deliver the news.

Prepare thoroughly for the termination event

A termination meeting is not a place to be ill-prepared. It’s important that you have all the information, and can anticipate questions in order to have it go smoothly. It’s also important to script and even rehearse what you’ll say, as these conversations are often very difficult.

"A termination meeting is not a place to be ill-prepared. It’s important that you have all the information, and can anticipate questions in order to have it go smoothly."

Creating a script is a proven tactic used by executives, managers, and HR professionals everywhere. Termination conversations can be uncomfortable, and you may become nervous, flustered, or otherwise distracted when delivering the bad news. If you haven’t made a plan for what you’d like to say beforehand your chances of saying something you didn’t mean go way up.

You might also create a plan for what will happen to the terminated employee’s work in progress. For example, if you’re terminating a salesperson who has appointments to keep in the following days and prospects to follow up with, you’ll want to work with the sales team beforehand to make sure all of this work is accounted for. 

Finally, you’ll want to prepare other departments who need to know about the termination. For example, let your payroll manager know ahead of time so that they can cut a final check. Make sure all parties and departments affected by the firing are well-prepared. These are critical, preparatory steps when learning how to terminate employees the right way.

The Termination Meeting

Don’t go at it alone

When you finally arrive at the time to terminate the employee, you’ll want to be sure that you’ve secured a private place to chat.  The meeting should consist of you, the employee being terminated, and at least one other person (most likely a representative from HR).

Never terminate an employee alone.

Without a witness to the conversation, the employee could potentially accuse you of harassment, discrimination, and a variety of other things. Protect yourself and your employee by having someone else in the room with you. There is no excuse not to have a witness.

Most commonly the second person will represent the HR department or be a member of the legal team. Whoever it is, this person should be prepared to answer detailed questions about pay, benefits, and related information. An employee should walk out of the meeting knowing exactly when their final paycheck will hit and when their benefits coverage expires.

Is all the paperwork involved in hiring and firing driving you crazy? Let us help!

Take Notes

If you follow the previous step and have a witness with you in the room, you should also assign that person to take some notes on the conversation. It’s good to keep a record, and by having a second person do the note-keeping, you can stay focused on the task at hand and carry the conversation with the employee.

Stick to the script

Now that you have a script going into the meeting, the next step is to stick to it. Do your best to stay on task. Speak clearly and directly. Less is more in these situations. Cut out the small talk and get right to the point.

"Do your best to stay on task. Speak clearly and directly. Less is more in these situations. Cut out the small talk and get right to the point."

When the employee enters the meeting, you might start by saying something like, “I’m sorry, but I have some bad news. As of today, we’re going to be terminating your position and letting you go. We’ve had previous discussions about your performance, and we just didn’t see the turn around that we were hoping for. I’m sorry, but we believe this is for the best.”

After breaking the news you can wait for a response. Sometimes there will be a long, awkward silence. Sometimes there might be a quick, angry reaction. Whatever it is, just let the employee respond and be attentive to what they say. Listen. Make sure they feel heard. It’ll likely take some time for them to process what’s going on, and they’re likely to have questions.

If you’ve planned ahead with teams and departments that will be affected by the firing, you should have answers to most everything they ask. Expect questions about pay, benefits, remaining PTO days, existing work or projects, etc. Ideally, you’ll have prepared answers to all of these.

Don’t Waiver

In some cases, the employee will have seen this coming, and although sad or upset, they’ll understand why they’re being let go. If you’ve done a good job setting and discussing expectations, this will most likely be the case. But in other cases, the employee might be caught completely off-guard, and they might try and fight for their job.

In these instances, it’ll be tough not to give in, especially if you like them as a person. But remember to stick to your script. Don’t provide false hope by saying something along the lines of, “well, let me see if there’s something we can work out,” or “maybe we can move you to another department.” If you know that there’s no chance for these things to happen, then do not say them.

You might also get questions like, “well, what if I work harder?” or “what if I take a pay cut?” If unprepared for questions like these, they might catch you off guard. Script out what you want to say beforehand. A great way to answer these questions is by saying something like, “We feel like we’ve given you ample opportunity to improve your performance. We haven’t seen any reason to believe it’s likely to improve. Because of this, we believe it best to part ways now.”

In more extreme cases, you may find yourself with a very emotional employee. They may begin to cry, show levels of intense distress or anger, or vent feelings of frustration. If this is the case, do your best to remain calm. Tell them that you recognize this is an extremely difficult change for them and that you know it can be challenging to process. But don’t feel pressure to reconsider your decision because of an emotional outburst.

Remember it’s harder for them than for you

Firing someone is very hard. It’s one of the toughest parts of being in business. No one likes to tell someone else that they’re out of a job, especially if you know the employee’s personal situation. Many times you’ll have extreme stress or anxiety leading up to the termination meeting. You might not have slept well the night before. You might feel really bad afterward. But just remember, it’s much harder for them than it is for you. Being the one to lose the job is far more difficult than being the one to deliver the news.

Because of this, try to do everything you can to refrain from saying things like, “this is super hard for me to do,” or “I feel as bad about this as you do.” Do not say anything about how you’ve “agonized over this decision” or how you “feel so awful to have to do this.” The reality is, you still have a job, and they do not. Reinforce the idea that you know this must be incredibly difficult to process and that you feel for them. Do not bring the emphasis back to you.

A few more things to avoid

Sometimes during really tense or uncomfortable situations, we feel the need to make a light-hearted joke. This is not the time or place for that. There’s nothing funny about being fired. There’s nothing light-hearted about losing a job. This is a somber moment. If there’s silence, let there be silence. Don’t let your discomfort get in the way of how someone else is feeling.

Another thing that occasionally happens at a meeting like this is a manager will make promises they cannot keep. They’re tempted to say something encouraging like, “you’ll find a better job in no time,” or “I know you’ll land on your feet.” Although these well-meaning comments are nice to hear, there’s no way to know that they’re true. Because of this, leave them out of your conversation. If you personally have connections at companies that you know are hiring for this employee’s position, and you’re willing to make a call on this employee’s behalf, you might mention this possibility. But if you’re just saying something to make the employee feel better, it’s better unsaid.

Finally, take responsibility for the decision. Do not blame others. Do not blame the CEO or the board. Do not blame a department head or anyone else. If it’s your responsibility to hold the meeting and tell the employee they’re being let go, then you should not shy away from the fact that you’re the decision-maker. Now is not the time to play the blame game.

Need ideas for questions to ask in an exit interview? We’ve got plenty.

After the Meeting

Walk them back to their desk

When the meeting is wrapping up, offer to walk the employee back to their desks so that they can collect their personal belongings. Now that they’ve had a little more time to process what is happening, they may have some more questions. Feel free to ask if they have any so that they’re comfortable asking questions if they do. 

When you arrive at their desk, offer them a box or bag to carry out their personal belongings. They may not need one, but it’s good to offer just in case. This is also a good time to collect any company property they might have. This could include computers, cell phones, headphones, security badges, or anything else.

If the employee has company property at their home, either make arrangements for a company representative to come and pick those up, schedule a time for the employee to drop them off at the office, or make an arrangement so the employee can ship them back to the office.

Show gratitude

After the employee has collected all their belongings and has returned any company assets, offer to walk them out of the building. This is a courteous way of ending the relationship and a chance for you to show gratitude for the time they spent at the company.

No, the employee was not perfect for the position, but there’s a good chance that they contributed something positive to the company. Thank them for their work, express gratitude for the time they spent with your organization, and do what you can to end the relationship on friendly terms.

Compensation after Termination

Each state has its own law regarding the last paycheck for a terminated employee. In Utah, for example, employers are required to deliver the employee’s last paycheck within 24 hours of the termination. This can be done by mail, direct deposit, or hand delivery. In any case, employers are required to send the employee’s last paycheck on the last regularly scheduled payday after termination.

When is Termination Illegal?

Also known as a wrongful termination, employees cannot be terminated on the basis of race, ethnic background, disability, gender, or religion. They also cannot be fired for filing a legal case against their employer or for exposing their employer’s wrongful doings and becoming a whistleblower. Lastly, it’s very important that you follow your company’s guidelines when it comes to terminating an employee because it is unlawful to terminate an employee if those guidelines were violated.

How to Avoid Termination

Termination is difficult for the employee as well as the employer. The employee is left to find a new job and the employer must find someone as quickly as possible to replace them. But what if there was a way to avoid termination altogether? Some terminations may be inevitable, but we believe there’s techniques or practices you can establish within a company to lessen the amount of layoffs or terminations that happen. 

Frequent Feedback

Managers should be giving frequent feedback to their employees. Daily, weekly, or monthly reviews should be conducted between the employee and their manager to give both sides a chance to communicate about their responsibilities often. This way, the employee is not surprised or shocked when feedback or correction is given. Small errors can then be adjusted along the way instead of allowing them to go off track for too long.

Temporary Suspension

If, after multiple verbal or written warnings, the employee is still not following company policy, then a temporary suspension might be the next step. Although it’s not permanent, it can really prove to an employee how serious the situation is and what the company is willing to do to stop the inappropriate behavior. Employers will also temporarily suspend an employee if there’s an open investigation going on and permanent termination is being considered.

Performance Improvement Plans

Performance Improvement Plans, also known as PIPs, are used to help employees have a clear understanding of what they need to do in order to be in good standing with the company again. It includes deadlines for when these improvements need to be made and allows the employee to actively work towards clear goals.

Communication is Key

Although there may not be an easy way to terminate an employee, there is definitely a right way. By following the steps laid out here, you’ll find that firings go smoother and are less intimidating. Remember that it is critical to set expectations and communicate about those expectations with employees throughout their stay in your organization. High performing employees should be recognized for good work. Under-performing employees should receive feedback and know where they stand. If poor performance continues then termination might be necessary. At this point, multiple conversations should have already taken place regarding performance, so the employee shouldn’t be shocked or surprised by the situation.

Terminating employees the right way reflects positively on your business and your culture. You should care as much about an employee when they enter your workforce as you do when they leave it. Learning how to terminate employees the right way will elevate your management teams and reinforce to your employees that they have your respect.

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