Learning to Let Go: Best Practices for Handling Employee Terminations

Terminating employees is often difficult and always fraught with considerable legal risk. But there are several key best practices you can follow that can ease the transition and help protect your business. As you will learn below, preparation, consultation and documentation are essential when it comes to employee terminations.

Voluntary separations

In the case of voluntary separations, also known as resignations, it is recommended that you require the employee to provide a written resignation and, in response, you reciprocate with a written acknowledgement of the resignation. Consider conducting an exit interview with the employee to learn what made them choose to leave your organization.

Involuntary separations

Involuntary terminations should typically have more documentation than resignations. Involuntary terminations can occur due to factors such as poor performance, misconduct or a reduction in force (RIF), discussed in further detail below. When terminating an employee for misconduct or poor performance, make sure your documentation shows that you previously addressed your concerns with the employee. This documentation should include conversations with the employee about their behavior or performance, written warnings to the employee and/or poor performance reviews, including performance improvement plans (PIP).

Additionally, there can be situations where an employee with no previous performance or misconduct issues does something that warrants immediate termination, such as violence, theft or other major policy (or law) violation that puts the company at risk. In those cases, you should thoroughly document the employee’s conduct and the specific company policy and/or laws that were violated. 

Additionally, it is unlawful for an employer to discharge an employee for reasons protected under the law, such as age, race/color, national origin, gender, religion or disability. With any involuntary termination, it is always a best practice to have the documentation reviewed by your legal counsel and/or a trusted HR services provider prior to moving forward. This mitigates employer risk. It also helps ensure that your termination reason(s) and all related documentation support a lawful termination.

Reductions in force

In cases of a RIF, companies need to be aware of the federal Worker Adjustment and Retraining Notification Act (WARN). The WARN Act requires most employers with 100 or more employees to provide a 60-calendar-day advance notification of plant closings or mass layoffs. There are other specific provisions and requirements under the WARN Act that you need to look at to determine if the law applies in your case. It is also important to note that many states have “mini” WARN acts with additional or different criteria that must be met. For example, California’s WARN Act applies to employers who own an industrial or commercial facility with at least 75 employees.

Preparation is key with RIFs. You should first clarify your business goals, then use those business goals to determine the criteria for selecting employees for the RIF. Next, you’ll want to clarify the process for decision-making regarding those affected. This includes determining the timeline of the RIF and who owns the key decisions throughout the process. Additionally, it is important to conduct an adverse impact analysis to determine if you’re laying off more of a certain protected class, such as women, minorities or older employees. In addition, you also want to lessen the pain for those leaving. The best thing you can do for them is to help them find jobs by providing outplacement services, if possible. Easing the transition with a severance package (in conjunction with a separation agreement) can also help. As with single involuntary terminations, all these considerations should be reviewed and approved in advance with qualified legal counsel and/or a trusted HR services provider.

Consider also employees not affected by the RIF. For example, how do you transition the workload of those who have been terminated to the remaining employees? Also important is to do everything you can to be keep employee morale up during such challenging times. Be as transparent and communicative with employees as possible under the circumstances. This helps keep the fear of the unknown from stifling productivity and eroding leadership credibility.

Final steps

Beyond planning and documentation, other logistical factors need to be considered in employee terminations. Be aware of state requirements for final pay, COBRA rights and other benefits.

When letting go of employees, always have a detailed and compliant plan, and ensure that all parties involved implement it consistently.

If you have any questions about hiring or terminations, talk to your HR services provider.

This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.

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