It does not matter how successful your business is or how great of a boss you are, eventually you will need to terminate employees. Terminating employees is one of the most difficult tasks for a business owner. More than ever it is crucial that business owners take the correct steps to terminate employees so as to avoid any drama. Social media and employer rating sites such as Glassdoor provide frustrated and angry ex-employees with ample outlets to air grievances online.
A business can minimize its risks and any drama that could lead to potential lawsuits by taking precautions and implementing termination policies that protect the company. The following are 10 tips on how to terminate an employee without negative consequences:
Implement a termination policy personalized to your business: Don’t just use any policy manual you find on Google. First, include a disclaimer up front in the policy manual that explains the employee handbook is not a contract of employment. This will ensure that none of the provisions in the handbook may constitute a binding commitment that the company or you could breach. Second, realize that in an “at-will” employment state, which New York is, the at-will relationship is a very useful defense in an action brought for wrongful termination. It is a good idea to reinforce throughout the handbook that an at-will relationship exists. There are many ways this can be done. For example, include (1) a statement that preserves your right to change the conditions of the at-will employment; (2) a provision affirming that each party has a right to terminate the employment at will, with or without notice; and (3) a policy that an at-will relationship exists unless provided for otherwise in a written, formal employment contract that is signed by the designated officer and the employee.
Have employees annually reaffirm their written acknowledgement that they have received the handbook: A written and executed acknowledgment can protect against potential lawsuits where the employee acknowledges and affirms receipt of the employee handbook; where:
The handbook clearly states an at-will employment relationship exists;
There are no promises of advancement or tenure made;
The handbook states the amount of accumulated paid time off;
The handbook provides employees the opportunity to affirm they have not been subject to discrimination or harassment;
Employees should be instructed not to sign the acknowledgement receipt unless he/she has read and understood the handbook.
Ensure everything is documented: By taking the time to maintain proper, detailed and consistent documentation employers can overcome claims of wrongful termination, discrimination, claims of defamation and wage and hour liability. Be sure to document verbal and written warnings and the employee’s receipt of the warning and discipline. Employers should also conduct and retain performance reviews on regular basis. It is important to ensure all reviews are accurate and if need be, reflect an employee’s lacking performance, if that review is to be the basis of future termination.
Standardize your termination process: Employers must ensure they appear nondiscriminatory and neutral when terminating employees. It is important for employers to recognize that your vulnerability to a potential lawsuit will greatly increase if the employee fits into one of the following categories:
Is over the age of 40;
Has been injured on the job or filed a workers’ compensation claim;
Is disabled in any way;
Has been involved in a sexual harassment dispute;
Has the ability to claim any discrimination based on national origin, religion, sexual preference, ethnicity or other grounds;
Is a minority or a woman with any conceivable discrimination claim;
The employee has been a whistle-blower;
Employers must be careful to be consistent and impose the same standards to all employees. Hence, any termination documentation must be objective and supported by observed and recorded behaviors instead of character judgments. An employer’s reasons for termination should be consistent and not result in firing one employee while only giving a warning to another employee for the same behavior.
Spend as much time deciding to fire someone as you did to hire them: Before terminating an employee’s employment, review the employee’s file, speak to their direct supervisor to get their thoughts, and ensure you have provided the employee with an opportunity to perform and improve at their job. It may be late on a Friday afternoon and you are angry at the employee, but taking the time to think about your decision may prevent an unwanted lawsuit.
Firing an employee for cause: If an employer fires an employee for cause, i.e., an act of insubordination, it may seem like an easy decision, however, employers should still take precautions even in the most extreme cases. Of course, if there is a safety concern you may ask the employee to immediately leave the premise. Still employers must document what happened and should include descriptions of behaviors and refrain from making judgments. As well, if you are firing an employee for cause, you should consider the employee’s protected status and how it relates to their position. For example, if you fire a woman from a department that is made up of 12 women, the woman’s protected status does not present the same risk that would exist if she were only 1 of 2 women in the department.
Always be truthful: Do not provide an untruthful reason for why you are firing the employee. For instance, if the employee was a poor performer but that was not well-documented in the employee’s file, you should not tell the employee you are firing him/her to downsize the business. If you plan on re-filling that position, it is not a layoff or downsizing. It might be easier to lie than to tell the employee he was a poor performer and unreliable. But it is easier for a jury to think that your lie was really an excuse for discrimination.
Figure out the finances: Before entering a meeting to fire an employee, you should figure out how much money the employee is owed. Employers must realize that the employee will go home upset and may soon seek out an employment lawyer because the ex-employee has financial responsibilities. For example, feeding a family. Your lack of preparedness and respect by not knowing the amount the employee is owed for expenses, time off, or other issues may lead to expensive lawsuits. It is also a good idea to have someone from your HR department explain any benefits the ex-employee might be entitled to.
Hold a proper termination meeting: If the employee to be fired is of a senior level, members of the C-suite or managers should be present in the room. If the employee is a lower-level employee, then generally the individual’s manager and HR should be present. Although most managers dread delivering the bad news, the employee’s manager should lead the conversation and let HR manage the paperwork and logistics. The meeting should be kept short, no more than 15 minutes, and the conversation should be straight to the point. You don’t need to be a boss who needs to use the termination meeting as an opportunity to win the argument. You have already won because you are firing the person. There is no reason to show any extensive evidence to support your reasons for firing the employee, you have done your job.
Remember they are just as human as you are: Finally, you should think about how you would like to be treated if you were the one being fired. Amidst all the careful communications and detailed record-keeping that is required to avoid risk, do not forget that treating people with compassion, respect, dignity and sensitivity is the right thing to do. Offer the employee the option to clean out their office right after the meeting or arrange a time during non-business hours for them to come in, if possible. Any person tasked with firing an employee should remember this: you will have a job tomorrow, but the person you are firing will not. Employers who show respect and act with dignity throughout the process are more likely to avoid the drama and potential lawsuits that may accompany firing an employee.