Maintaining Compliance During an Employee Termination

Terminations are nerve-wracking. They're not easy to do, even when necessary. Nothing you can do will make terminations entirely stress-free. But terminations are often far more challenging than they need to be.  But good preparation and the right attitude will make a big difference. Here are the general practices we do recommend:

Know Your Compliance Obligations Ahead of Time

Look up applicable laws regarding termination procedures and paperwork, accrued paid leave, severance pay, COBRA, and final paychecks before conducting a termination meeting. If you’re laying off a number of employees, you may have specific notice obligations under the federal Worker Adjustment and Retraining Notification Act (WARN) or a similar state law. You don’t want to miss any steps or deadlines. If the employee works in a different state, refer to that state’s laws.

You should also understand how antidiscrimination laws work in practice and take steps to reduce the likelihood that the terminated employee will file a discrimination claim. While at-will employment allows either the employer or the employee to terminate the employment relationship at any time, with or without notice and with or without cause, it does not permit you to terminate employment based on the employee belonging to a protected class (e.g., race, sex, religion, national origin).

Along similar lines, screen the termination to make sure it’s not based on a protected activity. Myriad state and federal laws protect employees from being discharged for certain reasons. For example, Section 7 of the National Labor Relations Act entitles employees to talk about their wages or complain about working conditions with each other. A handful of states prohibit employers from terminating employees for engaging in lawful activities outside of work. Reporting unsafe working conditions is protected. And don’t forget about the many leave laws that vary from state to state: from sick leave to military leave to school-involvement leave and more, you may be surprised by the types of absences that are protected.

There’s even some risk when the termination is for cause. A terminated employee could claim your reasoning is just for show, and they were actually terminated for an illegal reason. That risk grows exponentially when you don’t provide the employee with a sensible reason for the termination or when you’ve been inconsistent in applying your discipline policies.

Consequently, the safest way to terminate employees is to communicate performance issues to them, give them a chance to improve, and have documentation that justifies the legitimate business reasons behind the termination. This documentation would include policy violations, instances of poor performance, and any disciplinary or corrective action taken. The documentation should indicate that the company communicated the issues to the employee. The more you can do to show you had a legitimate business reason and gave them an opportunity to improve, the harder it will be for an employee to fill in the blank with their own illegal reason for termination. The termination will be less risky, and you’ll feel better about the decision because you treated the employee fairly.

In the case of layoffs, where the employee is not at fault, figure out a few ways you can help them land on their feet. Provide a severance if that’s an option. Remind them that they can apply for unemployment. Help them update their resume. Inform them of any opportunities you know about and facilitate networking connections if you can. In short, make the layoff meeting a productive discussion about their future. That’s going to be a hard discussion, no doubt, and it’s possible the employee won’t want to hear it. You can honor that too.

Be prepared for strong emotions like sadness and anger to surface during the termination meeting so that you can respond with confidence. While there’s a fine line between allowing space for initial processing and unnecessarily prolonging the meeting, you can acknowledge and validate the employee’s feelings without changing the end result. Although escalations into violence are rare, review your company’s procedures ahead of time for dealing with such situations.

Don’t Let Terminations Be a Surprise

Have you ever gotten an email from a boss saying something cryptic like “We need to talk”? You may immediately begin to worry. Are you in trouble? Are you getting fired? Until you have that talk, you can’t breathe a sigh of relief.

Why would your mind go there? It might be because you’re not clear on what could get you into trouble at work and you don’t feel safe. Vague out-of-the-blue messages are seldom a good idea. They’re a terrible practice when people believe that they could realistically lose their job for reasons unknown to them. That belief puts people on edge, inclining them to assume the worst when their manager reaches out without any context. Surprise terminations encourage everyone to adopt that belief and incentivize a culture of fear.

Terminations should never be a complete surprise. Yes, at-will employment allows you to terminate employment for any reason or no reason at all (as long as it’s not an illegal reason), but please don’t fire someone for any reason or no reason at all.

Clear rules and consistent practices are your friends here. Inform employees what’s expected of them and what could result in their dismissal—the employee handbook is a good place to do this. Enforce your rules consistently, not willy-nilly. If you let employees get away with policy violations, but then suddenly switch to strict enforcement, you’ll only create confusion and fear. You don’t need to follow the same process for every kind of offense—some behaviors may warrant immediate termination, for example. But don’t bend the rules for some employees and not others.

A coaching culture can also be your friend, especially with employees who are struggling to perform to expectations. If managers regularly work with employees on improving their performance and enhancing their skills, they’re in a good position to spot signs early on that a struggling employee may be more successful and happier doing something else. In some cases, good coaching means guiding an employee out of the organization. A loss is a loss, but guiding employees toward more suitable work elsewhere is usually much smoother and less disruptive than an involuntary termination. Plus, they leave with goodwill towards you. In situations where termination is the right call, if managers have had conversations with employees ahead of time about the consequences for failing to improve, they’ll have softened the blow when it eventually comes.

Lastly, don’t hide bad financials from employees. If business is slow and a layoff is possible, employees need to know so they can make informed financial decisions and contingency plans. They’ll be extra angry if they feel they’ve been lied to or misled. In an age where companies go viral on the internet for poorly conducting layoffs, it’s in your interest to be transparent and honest.

Stay Organized

Develop a checklist ahead of time of things that need to be covered. This list might include specific equipment and keys that need to be returned, passwords and access cards that will need to be disabled, coverage of the employee’s workload until a replacement is hired, notification to coworkers, vendors, and customers, COBRA information, a current address for W-2s, and what you’re going to say during the termination meeting.

Checking off boxes may feel impersonal, but the day of a termination is at the very least challenging for all involved, and at the worst chaotic, especially if you’re disorganized. Keeping the process smooth and orderly is both kind and professional.

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