How to Terminate an Employee

Firing or laying off an employee is a tough task, but it’s important to get it right.

Written by Jeff Rumage
How to Terminate an Employee
Image: Shutterstock / Built In
UPDATED BY
Brennan Whitfield | Dec 07, 2023

Most managers dread firing or laying off an employee, no matter the circumstance — even if the worker is an underperformer or a poor fit for the team.

While it won’t make it any easier, you can still terminate an employee in a way that shows respect for the employee, reduces the risk of a lawsuit and preserves the morale of the remaining workforce.

How to Terminate an Employee

  1. Give the employee opportunities to improve
  2. Document employee behavior and gather important employee files 
  3. Notify HR, legal teams and necessary staff 
  4. Prepare a termination meeting and termination letter
  5. Conduct the termination meeting
  6. Collect any company property 
  7. Notify the departing employee's team

“It’s never a great feeling,” said NimblyWise CEO Mike Sweet, who has fired or laid off dozens of employees during his two decades in the tech sector. “But it can be done in a way that’s caring and thoughtful and appropriate.”

 

Reasons for Terminating an Employee

Employees can be terminated for several different reasons, including:

  • Violation of Company Policies. This could include insubordination, absenteeism or dishonesty and disrespect toward other employees at work.
  • Poor Performance or Incompetence. In this case, an employee may show indifference or no effort to improve their performance at work, even when given multiple opportunities to do so.
  • Theft or Criminal Behavior. Theft of physical company property, misappropriation of funds or disclosure of trade secrets can all warrant an employee to be terminated for cause.
  • Harassment, Violence or Discriminatory Behavior. Harassment toward other employees — whether physical, discriminatory or sexual — are subject to not only termination for cause, but also legal action.
  • Layoffs. Employees may be let go due to a mass layoff event, sometimes called a “reduction in force,” based on economic reasons beyond the employee’s control. This is a type of “termination without cause.”

Related Reading10 Signs an Employee Is Disengaged

 

How to Terminate an Employee

Every company should have procedures that outline how to terminate an employee. This includes instructions for documenting policy violations, when to warn employees of poor performance and what steps to take on the day of the termination. Consistently applying these protocols to all employee terminations can help protect companies from a potential employment discrimination lawsuit, Melissa White, an HR knowledge advisor for the Society for Human Resource Management, told Built In.

While each company should develop its own policy, these are steps to take when terminating an employee:

1. Give the Employee an Opportunity to Improve

Even before an issue arises, employees should have a clear understanding of what is expected of them and know in no uncertain terms when they are not meeting those expectations. Unless the employee egregiously violates company policy, you should warn them about the issue in question and give them a chance to improve. In some cases, this could mean putting them on a performance improvement plan.

If the employee is not made aware of the issue and given the opportunity to improve their performance, they may feel like they are being unjustly targeted.

“I think the most fundamental tenet when you are terminating an employee is that you are approaching the process with fairness and that the employee feels like they were treated fairly,” Megan Carannante, co-chair of the labor, employment law and employee benefits department at law firm Pullman & Comley, told Built In. “If they feel they were treated unfairly — whether that’s justified or not — that’s often what spurns an employee to bring a claim related to their employment termination.”

2. Gather Documentation

Document any potential issues with the employee. This will support the case for termination in the event that the employee files an employment discrimination claim.

Any conversations about job performance, behavior or policy violations should be written down, either in a follow-up email or by bringing a witness to the meeting. Managers can also retroactively document things that have happened in the past.

Some examples of documentation include an email, a performance review, a formal write-up or a performance improvement plan.

3. Notify HR and Legal Teams

If you’re a manager thinking about terminating an employee, loop in the HR and legal teams sooner rather than later. Both teams can offer insights and flag any factors that might put the company at risk of an employment discrimination lawsuit.

These are some examples of employees who might pose a higher risk, according to Carannante:

  • Employees who have been with the company for a long time could feel like they are being discriminated against for their age, or they could feel angry if they don’t receive a severance that recognizes their years of service.
  • Employees who have recently complained about an issue may feel like they are being retaliated against.
  • Employees who recently returned from a leave of absence, like parental leave or the Family and Medical Leave Act, could argue they are being retaliated against.
  • Employees who have a history of making claims against the company are more likely to pursue a lawsuit when they are terminated.
  • Employees who are a member of a protected class could argue they are being discriminated against. Protected classes include race, color, religion or creed, national origin or ancestry, age, disability, veteran status and sex (which includes pregnancy, gender identity and sexual orientation).

If the employee is a member of a protected class, managers should consider whether this employee could reasonably believe that their termination is due to their belonging in that class. In the case that an employee is terminated for this reason, they could claim it as a wrongful termination, as the decision may be labeled an act of discrimination.

If the employee is considered a potential lawsuit risk, the HR and legal teams may want to consider the timing of the termination, ensure there is enough documentation to support the decision and possibly offer a severance agreement to minimize legal risk.

4. Plan the Termination

Inform Necessary Staff

Before the employee is told the news, the HR team should compile the proper papers, such as non-disclosure, non-disparage or non-compete agreements, as well as the employee’s severance package, which can include pay, extended health insurance coverage and job search services.

Accounting should also use this time to prepare the person’s final paycheck. The rules on this vary state by state, with some requiring that fired employees receive their final paycheck on the day of their termination.

The IT time team is needed to cut off the employee’s access to email and other company resources. The timing on these cutoffs must be precise: Too soon, and the employee will know something’s up; too late, and a disgruntled employee could do real damage to the company.

Decide How to Distribute the Employee’s Workload

During this time, it’s also best to figure out how to distribute the employee’s workload and clients until a replacement is hired.

Prepare a Termination Letter 

A termination letter is a document provided by an employer to an employee to notify them in writing that they are being let go. This letter is often required to be signed by the departing employee to signify that they acknowledge their termination, as well as understand its reasoning and next steps. Termination letters should be tailored to the employee being terminated, and include clear information about the following:

  • The employee’s name, position and other specific identifying information
  • The effective date and reason for the employee’s termination
  • When and how they will receive their final paycheck 
  • What date their company-sponsored insurance benefits are valid through 
  • When and how to return company property, such as keys or electronics 
  • Contact information for additional questions or concerns

Prepare Your Message For the Employee

When planning a termination, this is a good time for managers to prepare what they are going to say during the termination meeting.

5. Deliver the News

Schedule a Private Meeting With the Employee and an HR Representative

When it comes time to tell the employee they have been terminated, a meeting should be held in private so they don’t feel embarrassed. The employee’s manager and an HR representative should be in the room. If the employee has a conflict with a particular coworker or manager, that person should not be involved with the meeting.

Inform the Employee of Their Termination, Last Day of Employment and Severance

The terminated person needs to leave the meeting knowing three things clearly: Why they were fired, when their employment will end and what the company will offer as a severance package.

Be Transparent and Empathetic Towards the Employee

Sweet, the CEO of NimblyWise, suggests keeping the conversation empathetic, compassionate and succinct. The employee should be given the chance to ask questions, but they should not be given an opportunity to discuss or negotiate the decision to terminate their employment.

“The decision has been made,” he said. “It’s not helpful to rehash how we got to the situation.”

If employees are laid off due to financial or business reasons, Sweet suggests being more transparent.

“They need to know that it wasn’t them, that it was a necessary step for the business, and was needed given the current business reality,” he said.

Tell the Employee They Will Receive an Informational Email After the Meeting

Toward the end of the meeting, you should tell the terminated employee that they will receive an email containing all of the legal and HR information that was communicated during the meeting. This email may contain the termination letter prepared prior to the meeting, which should provide a recapitulation of what was just discussed.

6. Collect Company Property

Once the hard part is out of the way, you can discuss the logistics of what happens next. Explain when the terminated employee will lose access to their technology, and let them know if you would like them to tie up any loose ends or transfer any project materials to other team members.

You should also detail when you would like them to leave the building, keeping in mind that they will need time to clear their desk and hand over any badges, keys, laptops, cell phones and other company property. If the employee works remotely, you should send them instructions for shipping those materials back to the IT team.

7. Tell the Team

Whether the departing employee’s team is in-person, remote or hybrid, managers should communicate the news to their team. This will help ease any fears that colleagues might have about their jobs. While you shouldn’t get into the reason behind the employee’s termination due to confidentiality reasons, you could put employees’ anxieties to rest by saying no more terminations are planned.

You can also share a timeline for filling that employee’s position and what the plan is to handle that employee’s work in the interim. You should also make yourself available to answer employees’ questions on a one-on-one basis.

Related Reading5 Ways Empathetic Leaders Can Set New Hires Up for Success

 

What Not to Do When Terminating an Employee

Stick to your talking points. Keep the termination meeting short and to the point to avoid veering off-message and saying something inaccurate or inappropriate. That could potentially open the company up to a lawsuit. Here are some things not to do or say when terminating an employee:

1. Don’t Give a False Reason

It’s natural to want to “soften the blow” by being indirect about the reason behind the termination. You don’t want to hurt the employees’ feelings, especially if the employee is being fired for poor performance. However, doing this is not only confusing for the employee, but it could land the company in hot water down the road.

As Carannante said, “You want to be able to give a reason that you can defend.”

2. Don’t Blame Someone Else

Nobody wants to be seen as the bad guy. But instead of shifting responsibility — like saying that other team members are having difficulties with the employee — cite your own concern about the employee’s ability to get along with the team.

“It’s about your decision and taking responsibility for that,” Roza Szafranek, CEO of HR consulting firm HR Hints, told Built In. “Not hiding behind someone else’s back.”

3. Don’t Talk About Your Emotions

Terminating an employee is a difficult task, but that doesn’t mean you should share how difficult it is for you. The employee is in the process of losing their job, so they are seeking answers, like the reason for termination and the date of their last paycheck. They shouldn’t be responsible for managing your emotions in addition to their own shock and distress.

4. Don’t Delay the Inevitable

A manager might feel bad about terminating an employee, so they sometimes try to connect with the employee on an emotional level before delivering the news. But this only makes things more confusing and complicated for both the manager and the employee, Szafranek said.

5. Don’t Make It a Discussion

Make it clear to the employee that the decision has been made and that it’s not up for debate. Allowing the employee to engage in a back-and-forth dialogue could cause the conversation to get heated or veer off into topics that haven’t been documented and vetted by HR and legal counsel.

You should end the meeting by asking them if they have any questions, but try to limit any attempts to relitigate the reasons behind the termination.

“Keep it short, keep it super specific and concrete,” Szafranek said. “Send the signal that this is a meeting when you communicate the decision. It’s not a negotiation moment.”

Frequently Asked Questions

Managers can show dignity and respect by first warning the employee about the issue and giving them a chance to improve. If the employee still doesn’t meet expectations, they should be told the news of their termination clearly and succinctly in a private location. They should be given the chance to ask questions but not argue about the decision.

Managers should inform the employee of their termination in a clear and succinct way. They can explain the reason behind the termination and give them the opportunity to ask questions, but make it clear the decision has been made. The manager should also notify the employee when their last day at work will be and whether the company will offer any severance, health insurance coverage or job search services.

Employees should be informed of their termination clearly and succinctly, so managers should avoid starting the meeting with casual conversation. They also shouldn’t bring up any reasons for termination that have not been documented and vetted by the HR team. Managers should also not talk about how difficult it is for them to break the news or try to shirk responsibility for the decision by hiding behind another person’s statements.

An earlier version of this story was written by Lisa Bertagnoli and published in 2021.

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