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Best Practices for Employee Termination

Minimizing the risks associated with the separation process

Terminating the service of an employee is never a pleasant task, but many employers fail to fully understand the process and its inherent risks. This article is intended to educate employers on the difficult task of terminating employees, and how to do so without liability.

Employment Relationship
The first issue an employer must confront is what type of employment relationship exists between the employee and the company. In many states, the relationship may be “employment at will” which allows either party to terminate employment with or without reason or notice, as long as it is not discriminatory or a wrongful discharge. Employers should be aware of their state’s laws regarding ‘at will’ employment.

The employment relationship may also be governed by a contract of employment. Generally, such a contract requires notice as to the termination along with specific reasons or grounds for unilateral termination of the agreement (i.e., incapacity, misconduct, and for cause). Employers should be aware that a simple “offer” and “acceptance” letter may create a contract of employment under the laws of their state.

Finally, the employment relationship may require progressive discipline of the employee (i.e., verbal, written, and final warning) prior to termination as required by company policy in an employee handbook or as required in a collective bargaining agreement (in the case of union employees). It is mandatory that employers check to assess whether progressive discipline is required prior to termination to avoid any liability.

Disciplinary Policies
Developing and administering disciplinary policies and procedures ensure that disciplinary matters are handled uniformly and objectively. Employers can encourage superior performance through such policies or, minimally, lessen the need for a drastic measure such as a termination and avoid the risk of costly and disruptive legislation.

With effective disciplinary procedures in place, employees know what offenses will be punished and the steps that will be taken. In addition, it may increase employees’ sense of job security and protect them from the unsafe actions of their coworkers. Finally, documented disciplinary procedures will give employees who violate rules the opportunity to improve.

As previously discussed, “employment at will” does not require a reason. However, business necessity along with employment laws (i.e., unemployment and anti-discrimination) may require a legitimate business reason for termination. The most common include job performance, reduction in force, attendance issues, and misconduct, along with expiration of medical leave of absence, inability to work, and fitness for duty issues.

Top Ten Termination Pitfalls
Following is a list of common mistakes employers make when terminating an employee, which can have catastrophic repercussions. Here are ten situations to avoid, as they can lead to unnecessary rancor and/or a lawsuit:

Disparate Treatment – conduct for which other employees were not terminated

Misinformation – based on poor investigations, with insufficient or inaccurate facts

Insensitivity – humiliating an employee, which can lead to a “revenge” lawsuit

No Warning – for things an employee had no reason to believe would cost him/her the job

Poor Documentation – where little or no documentation exists or when documentation was not shared with the employee, particularly in cases of unsatisfactory performance or cumulative events

Unilateral “Crack Down” – after an employer decides, unilaterally, to get tough on misconduct or unsatisfactory performance that has been tolerated in the past

Poor Timing – reason for termination comes six months after misconduct has occurred; or, even for legitimate reasons, after an employee engages in some form of protected activity

Miscommunication – failing to tell the employee why he/she was discharged or calling a termination by some other name: e.g., “layoff” or “suspension,” etc.

Wrongful Termination – so blatantly unlawful that the employee knows it before seeing a plaintiff’s lawyer

The Litigious Employee – some people simply will not accept responsibility for their conduct and will sue, blaming the employer for their termination.