Employee Termination

What Do We Mean by Employee Termination?

Strictly speaking, the word termination describes any exit that occurs from the company. We often think of it as referring to an involuntary termination of employment—firing someone—but it also includes voluntary resignation. Learning how to deal with either is a fundamental skill of HR.

Types of Employee Termination

Let’s look at the different types of termination.

Termination for Cause

Termination for cause means some aspect of the employment contract between you and this employee 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.

Involuntary Termination

Sadly, there are times when you need to let someone go. Any termination that is not decided or controlled by the employee is considered involuntary. This includes termination with cause, termination without cause, or layoffs.

Voluntary Termination

Voluntary termination occurs when an employee resigns (quits). 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. 

Mutual Termination

This normally occurs when you are having a conversation with an employee who is underperforming. As you present the ways in which the employee hasn’t met expectations, the employee acknowledges something to the effect of, “This isn’t working out,” and the two of you come to an agreement to end the employment.

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.

How to Know When Termination Is Needed

This can be extremely complicated. There are times when it is black and white and there is no other option than to fire someone. There are other times when it’s probably warranted, but is not as clear.

Creating a Hostile Work Environment

Harassment or creating a hostile work environment most frequently result in a clear-cut termination. Every company is required to provide a safe work environment, and that includes a culture of physical and psychological safety. If an employee is harassing another employee in any form—sexual, physical or psychological—that is grounds for termination. The same goes for an employee who creates a hostile work environment.

Performance

Underperformance can be due to a myriad of circumstances or outside influences. If it’s the first time an employee has underperformed, it probably doesn’t warrant termination. Discuss specific expectations for improvement and document them. If the employee still fails to meet expectations, termination may be necessary at that point.

Attitude

We have all experienced a coworker with a poor attitude or just an overall negative outlook on the company, work, or life. While this by itself isn’t grounds for termination, it can lead to poor performance and a hostile work environment. It’s something to pay attention to and work to correct as soon as possible.

How to Terminate an Employee the Right Way

It’s time to have that difficult conversation. No one enjoys it, but you have worked with the employee’s manager and determined that termination is the next step for a particular employee. How do you have that conversation, respect the employee, and protect your company from wrongful termination suits?

Step 1: Gather Your Documentation

Before you terminate someone, make sure you have documented everything related to the reason for termination. If it’s a harassment complaint, make sure you have statements from the person who brought the complaint to you and statements from others who witnessed it. If it’s performance-related, make sure you have documented the conversations you’ve had and steps you’ve taken to help improve performance. This does not get presented to the employee at time of termination, but is kept on file for any potential unlawful termination claims.

Step 2: Schedule a Time to Talk

To properly terminate an employee, 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.

Step 3: Plan Ahead

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.

Step 4: Stick to the Facts and Be Ready to Answer Questions

Keep the meeting short and to the point. State that you are terminating their employment and the reason why. You might say 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 turnaround 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. 

Step 5: Walk Them Back to Their Desk

It’s best that you or security personnel walk with them to collect their belongings and escort them out of the building; this prevents potential conflict with other employees and ensures that they aren’t taking company property with them.

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 it up, schedule a time for the employee to drop it off at the office, or make an arrangement so the employee can ship it back to the office.

Step 6: Deliver Final Compensation

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.

Tips for Conducting a Termination Meeting

In addition to the steps listed above, the following tips can help terminate an employee without conflict or issues arising.

Tip 1: Be Human (Be Kind)

At the end of the day, your biggest role as an HR professional is to do what’s best for the company and the other employees. But remember to take this action with a kind heart. Come from a place of sincerity when you wish them best of luck with their next role. Handle a termination the way you would want to be treated. Even though you are letting them go, they were a part of your work family. Pragmatically, treating people with respect also may decrease the anger and desire for revenge that leads to wrongful termination lawsuits.

Tip 2: Bring Support

The meeting should consist of you, the employee being terminated, and at least one other person. 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 come and when their benefits coverage expires.

Tip 3: Take Notes

If you follow the previous tip 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.

Tip 4: Don’t Waver

In some cases, the employee might be caught completely off-guard, and they might try to 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 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.

Tip 5: Stay Serious

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.

Tip 6: Avoid Meaningless Encouragement

Sometimes at a meeting like this, 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’re just saying something to make the employee feel better, it’s better unsaid.

Tip 7: Take Responsibility

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.

Ways to Avoid Termination

Termination is difficult for the employee as well as the employer. But what if there was a way to avoid termination altogether? Some terminations may be inevitable, but there are 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. They include deadlines for when these improvements need to be made and allow the employee to actively work towards clear goals.