Small Business Brief

Business Advice

How to Terminate an Employee

Terminating an employee can be an extremely uncomfortable situation. To make sure everything goes smoothly, read on to learn how to terminate an employee.

In 2016, approximately 54,549 people were fired or laid off everyday (including holidays and weekends).

If it’s your job to terminate an employee, you may be wondering how you’ll get through what can be an awkward conversation for you and a devastating one for your employee.

There are good and bad ways to have this conversation, and you’ll need to be prepared for any type of reaction from your employee. Read on to learn how to terminate an employee the right way.

Ready? Let’s get started.

Why You Need to Terminate The Right Way

While the “employment-at-will” principle allows you to terminate your employees at your own discretion, it doesn’t mean that you can simply fire someone on the spot. Employees have rights, and if you’ve failed to learn how to terminate an employee correctly, you could be in deep trouble:

Being Sued by a Former Employee

Terminating employees can be costly, resulting in massive legal fees if not done properly. There are federal and state laws protecting employees from wrongful termination. If you violate any of those laws, you could face legal charges.

You’ll need to understand employee law, follow the correct procedures, and avoid making any terminations that could qualify as unlawful.

Loss of Trade Secrets and Company Property

If you don’t terminate with due diligence, you could risk losing your company files and data. You’ll need to ensure that a terminated employee can’t access confidential files and information or any crucial company property.

Otherwise, a previous employee could secretly disclose trade secrets or confidential information to your competitors, which could give them a competitive edge.

Negative Impact on Company Reputation

When an employee is fired, their personal life is directly impacted. If they feel that they’ve been unfairly treated, they may decide to negatively brand your company and damage its image on social media.

People who are thinking about applying or accepting a job with your company will usually search your business on Google and look for reviews on websites like Yelp and Glassdoor. If these people find negative reviews about working for you, you’re likely to miss out on top talent which will impact your business.

Consequences From Other Employees

When colleagues are terminated, employees remaining with your company may feel like their job security is threatened. These employees may feel like they could be the next on the chopping block.

You may find that some employees are resentful of your choice to terminate a coworker who has become a friend. And some could even be psychologically affected due to worrying that they may be next, resulting in poor performance or high employee turnover.

How to Terminate an Employee Correctly

Firing an employee is likely to be stressful for everyone involved. Even if you’ve communicated about issues and performance problems with your employees, very few people believe that there’s a chance they could actually end up getting fired.

Unfortunately, most employers wait too long before firing poor-performing employees. These employees then believe that there’s no way they’ll get fired. They assume you can see that they’ve been trying hard, you know they’re a really lovely person, or you like them.

Even if you believe the above, business is business. And your feelings are irrelevant if an employee is failing to perform the job you hired them for.

Here are the steps you should take when deciding how to terminate an employee:

Check Past Feedback

If you’ve been giving an employee a raise every year, along with glowing performance reviews, they’re going to be shocked when you terminate them.

Look back at your past relationship with the employee and begin changing the signals they’re receiving from you. If you’ve been stewing over their performance and yet not showing this in your feedback, it’s time to change the game.

Give Them Warnings

Few things will make your employees more upset than feeling like being fired “came out of nowhere.” Unless a sudden, egregious act has occurred, your employees should always experience feedback and coaching throughout their careers.

Before you think about terminating an employee, attempt to figure out what could be causing them to fail.

Take steps to help your employee improve their performance, give them any assistance you can, and support and encourage them.

Document every step in this process so they’re aware of what’s happening. This will also protect you just in case your employee tries to sue over the termination.

When it’s time to give them a final warning, take them aside privately. Explain why you’re disappointed with their performance. Give them a period of time (30-60 days works well) to turn it all around.

Make sure that you’ve made it very clear that if they continue to underperform, you’ll have no choice but to terminate them.

Get a Witness

In the United States, if an employee wants to sue, they’ll need to hire a lawyer who thinks they can win. Without a witness, the way that their termination plays out will be your word against theirs.

If you have an HR team, it’s a good idea to use someone from HR as your witness. They’ll also tell you how to terminate an employee in a way that will be both firm and kind.

They’ll also be able to help you if you get stuck and you’re not sure what to say next. A witness will limit your liability as they will be able to back you up if your employee does take legal action.

Don’t Provide Lengthy Explanation

If you’ve documented your employee’s performance and coached them in an attempt to help them improve, there’s no point going over why they’re being fired when you’re terminating an employee. It won’t accomplish anything and can be cruel.

However, your employee is sure to ask you why they’re being fired. It’s important you can answer this and break it down honestly without blaming them.

Keep it performance based and avoid getting personal. If they’ll be looking for a new job you may want to tell them about The Complete Guide to Creating Your Resume. Wish them luck in the future, and avoid debating the issue.

Stick to the Facts

Unfortunately, an employee who is being terminated is likely to get emotional. Have a box of Kleenex close by, but try not to get caught up in their emotions.

Let them know when they’ll need to leave the office. If you’re providing severance pay, explain how much they’ll get and if they’ll be entitled to any other benefits once they’ve left.

Advise them what you would say if anyone calls you asking for a job reference. You may want to talk to an employment lawyer first so you can define the exact wording.

Ask them to Leave Immediately

Unless you have an urgent reason to keep your terminated employee around, ask them to leave the premises immediately after they grab any personal items.

Make sure they don’t have any company property in their possession. Check that they have turned in their laptop, smartphone, badge, door pass, key, and any other equipment they’ve been using.

Most states have laws about when you need to pay a final paycheck, how much you need to pay, and how you can dock their pay if they owe you for company-owned items. It’s best to make sure these are all accounted for before they leave for the last time.

Escort them to the door so they can’t change any computer passwords, remove any data, or steal company files.

Protect Their Dignity

If you must terminate an employee, it’s important to treat them respectfully and not humiliate them. Not only is this reducing your risk of a lawsuit, but it’s simply the right thing to do.

Remember: Even if this employee wasn’t the best choice for your business, they’re still a person. Always terminate them in private.

It’s a good idea to wait until your other employees have left before you fire someone. They’re likely to be upset, and that way they won’t need to walk out in front of their coworkers.

This also prevents you from draining morale the rest of your employees who are likely to be sympathetic to the person you’ve just fired.

Get it Done

If you’re hoping to learn how to terminate an employee without causing any negative feelings, it’s best to accept that this is impossible. Your employee is likely to get emotional and may even cry.

The only thing worse than terminating someone who is angry, violent, or emotional is not terminating them.

Continuing to employ someone who is underperforming or negatively impacting your business will have two consequences. First, it allows their behavior to continue or worsen. And second, it demonstrates to other employees that they’re able to get away with the same behavior.

Wrapping up

Firing employees is always tough, and there’s no guarantee that they won’t take legal action no matter what actions you take. But if it must be done, the above steps will help make sure it happens as smoothly and easily as possible.

The actions you take will really matter to the person being terminated and their co-workers who will quickly learn that they’re gone.

Need more business advice? Check out some of our helpful articles today.