As a boss, sometimes you have to terminate an employee—but it’s never easy. There is a seemingly unending list of considerations a manager must review before making the final decision, and that does not even begin to cover how the employee will respond upon hearing the news.
As is the case with most issues, it is always a good idea to do your research. Before arriving at a decision to terminate an employee, be sure to first understand all applicable employment laws. It is also important to anticipate how the employee will react to the news so you can prepare accordingly.
Here are a few factors to consider when you are in the process of terminating an employee.
1. Is the potential layoff based on discrimination?
Now that sounds like a loaded question, doesn’t it? Nearly every employer in America would say they’re opposed to discrimination in the workplace, but somehow, stories consistently emerge about employees facing pervasive discrimination while on the job. Some of these instances turn into lawsuits against the employer.
So, before taking action, it’s vital to review whether a lack of information or a simple misunderstanding has led to real or perceived discrimination. For example, if a devout Muslim employee takes breaks each day to pray and the manager mentions the number of breaks as a reason for the termination, this employee may have grounds for a discrimination lawsuit against their employer.
Religion is only one protected category. Others include race, color, sex, national origin, disability, age, or genetic information. Make sure you thoroughly document every time you speak to an employee about his or her failure to meet a workplace standard. Ideally, send written notifications that include links to the company policy. If you’re continually speaking to one employee about an issue that others don’t seem to have, it’s also a good idea to document instances of other employees meeting the standard to support impartiality in your judgments. This makes it much easier to justify the decision if it faces scrutiny later.
2. Are there stipulations in the employee’s contract about termination?
Contracts are put in place to protect both the employer and the employee. It is critical to ensure you are holding up your end of it.
If your employee has a contract, take time to carefully read through it before making a termination decision. Many employment contracts contain provisions around what is considered cause for the employee’s termination. All states recognize some form of “at-will” employment, which is usually stated in the contract as saying the employer can terminate the employee at any time, with or without cause. You don’t necessarily need a reason to fire your employee.
The reality, however, is a bit more complicated. There are notable exceptions to your ability to fire an employee at will, and it’s in your best interest to have your reason for firing the employee clearly defined and documented, even if you may not share the extent of these details with the employee.
It is crucial to document instances in which an employee failed to adhere to the contract, whether it is recording times when an employee failed to deliver an assignment on time or acted inappropriately at work.
Once you have established a case for termination, have an attorney review the contract and the documentation you have assembled. Ask for their advice about what—if anything—needs to be shared with the employee to constitute a just cause. By doing this, you can feel confident in your termination decision.
3. Does a collective bargaining agreement cover employment terminations?
Labor unions can play a critical role in advocating on behalf of a company’s employees. Collective bargaining agreements formed between an employer and a union do, however, add additional layers of complexity to a termination decision.
Unlike a regular employment contract, a collective bargaining agreement is struck between the employer and all unionized employees. Many of the stipulations contained within the agreement, however, are similar to an employment contract, and this includes details around terminations.
There are a few specific details to keep in mind if you’re considering terminating a unionized employee. Some collective bargaining agreements prevent layoffs entirely, even in the event that it cannot meet its payroll obligations. Others require the rehiring of a terminated employee as soon as their economic prospects improve. Still, others outline requirements for seniority. For example, certain collective bargaining agreements state a unionized employee with other qualifications or credentials must be moved into a separate position for which they are qualified if their current position is in line to be eliminated.
Before making a termination decision involving a unionized employee, meet with a labor relations official from your company. They will be among the most knowledgeable employees in the company as it relates to the collective bargaining agreement details and can inform you as to whether you have established grounds to terminate the employee or if alternative arrangements need to be made.
4. Is the employee entitled to severance pay?
Severance pay can be mutually beneficial. A terminated employee receives some form of compensation to shoulder the financial blow associated with a loss of income, while the employer protects their reputation. It is therefore important to know whether it is owed to a terminated employee or if you should offer it regardless.
Luckily, you are likely to uncover whether an employee is entitled to severance pay or not as you do your due diligence before arriving at a decision. It comes back to the advice offered earlier: carefully review all relevant employment contracts. More often than not, these documents will outline whether the employee is owed severance pay upon termination as well as scenarios in which they would not qualify for it. Poor job performance is, once again, grounds to void any agreement around severance pay.
But other times, the decision of whether to provide a terminated employee with severance is not as straightforward. In the event of an unfortunate layoff event caused by factors such as inflation, it is important to maintain your company’s employer brand. With all the cost cuts, perhaps entities should consider seeking advice from business management professionals, lawyers, and finance experts to be specific. During such times, it is worth considering whether including a severance package could preserve your company’s reputation while also helping the employee get through a stressful time.
5. How will I communicate the termination to the larger team?
The termination of an employee can have a profound effect on an entire staff. A termination can harm staff morale, decrease productivity, and can even have a cascading effect if handled improperly. Much of this can be prevented through thoughtful planning on the part of the manager responsible for the termination.
Transparency around standards for performance can lessen the impact of an employee termination announcement. If you establish objective criteria for employee performance and then use those criteria with employees when assessing their performance at regular intervals, they will feel less taken aback by the news of another employee being terminated. Employees do not want to feel as though management makes decisions arbitrarily.
Beyond being objective, it is important to have a plan for making termination announcements. While you should not try to hide the fact the employee was let go, you should do all that you can to protect their privacy. Simply tell their former co-workers that a decision was made and that you cannot go into specifics. Make sure you are clear about any changes in workflows and company leadership structure and emphasize to employees you are happy to discuss company performance standards with them if they ever have questions.
Transparency is Key
It was mentioned earlier, but it is worth repeating: Transparency can help you avoid so many of the issues associated with employee terminations. When employees feel their performance is being judged fairly and that all employees are being held to the same standard, there will be fewer complications if a termination arises. Build a culture of transparency now and it will pay dividends later.
