Business 101: Principles of Management

Learn about the several steps involved in the process of terminating an employee, as well as the best practices a manager can use to ensure a fair and legal separation of employment.

Breaking Up Is Hard to Do

In this lesson, we will study the process of terminating an employee and the best practices used by human resource managers to ensure a fair and legal separation of employment.

Terminating an employee is never easy. It creates a hardship on both the company and the employee. There are several steps to follow that make the process of terminating an employee easier to bear. Steps in the process include:

• Documentation of employee performance and behaviors
• A compelling reason for termination
• A set of alternatives to termination
• An exit interview
• A written statement explaining the terms of the separation

Documentation of Employee Performance

Let's pay a visit to Chan's China Shop. Mr. Chan's china shop sells some of the most expensive china in the world. Chan, the owner, noticed that Chumsley, the salesperson, has been breaking many pieces of china over the last few months.

Chan likes Chumsley very much and doesn't want to terminate him. However, it is beginning to cost Mr. Chan a fortune in profits. He knows he must do something soon.

A relieved Mr. Chan remembered that he had every employee sign the discipline policy on their first day of work. This was a relief because each employee was made aware of reasons for termination. Now, Mr. Chan had to work on accurately documenting Chumsley's performance on the store floor. Each time Chumsley dropped a piece of china, Mr. Chan logged it in his employee file.

Documentation of employee performance and behaviors is the first step in the termination process and begins with carefully documenting important details of the employee's performance on the job during the course of employment.

Documentation of employee performance and behaviors first begins with a very clear and concise discipline policy. The policy must clearly state the grounds for termination and the progression of discipline.

It is a best practice of managers to have employees read and sign the discipline policy when the employee is hired. This will avoid problems later on, should the employee be terminated.

Compelling Reason for Termination

Some of the documentation Mr. Chan will review to make the decision to terminate Chumsley is:

• Past performance appraisals
• Documentation of verbal warnings
• Documentation of written warnings

A compelling reason for termination is the next step in the process, and it is the grounds on which the employee is being terminated. Reasons for termination should be clearly communicated through a discipline policy. If termination is not justified or the employer lacks a clear reason for separation, there can be legal ramifications.

Chumsley is costing Mr. Chan plenty of money by breaking the products. However, unless breaking china is a documented reason for termination stated clearly in the discipline policy, Mr. Chan will have a difficult time getting rid of Chumsley.

It is a best practice of managers to communicate the specific reason for the termination. This direct communication clears up any confusion. The employee understands the reason for termination and will generally agree to that decision.

Set of Alternatives

A set of alternatives is the next step in the process, and it is a set of different measures which may be taken prior to the decision to terminate an employee. While this step is not always an option, it is important to know that it's available. These measures can include:

• Additional training to improve job performance
• Offering a different position within the company
• Counseling
• Suspension

It is a best practice of managers to try to place an employee elsewhere in the company prior to termination. It is good for employee morale and may mitigate any legal issues later.

Exit Interview

An exit interview is the fourth step in the process, and it is an interview with the employee being terminated to discuss the cause for the employee's termination. An exit interview is beneficial for both the employee and the employer. Here's why:

• The affected employee will experience negative emotions about the termination
• Managers can determine changes that may be needed to the job description, training needs or workload
• Recruiters can make changes to the recruitment process

It is a best practice of managers to ask open-ended questions in an exit interview. Open-ended questions are questions that require an explanation rather than a 'yes' or 'no' response.

Written Statement of Termination

Finally, a written statement of termination is a statement that explains the termination. The letter of termination may include:

• Reason for termination
• Date of termination
• Benefits available after termination
• Severance pay schedule, if offered

It is a best practice of managers to present the employee with important information regarding what to expect after the termination. After receiving this information, the employee:

• Has no reason to make contact with the company in the future
• Can use the information to file for unemployment benefits
• Has a record of his or her employment to use as a reference for a new job

Summary

In summary, terminating an employee is never easy. There are steps a manager should take when separating an employee from work.

1. Carefully documenting important details of the employee's performance on the job during the course of employment.
2. Communicating the grounds on which the employee is being terminated.
3. Developing a set of different measures which may be taken prior to the decision to terminate an employee. These can be to place the employee in a different position - or offer counseling or maybe additional training.
4. Arranging an exit interview with the employee being terminated to discuss the cause for the employee's termination.
5. Providing the employee with a written statement that explains the termination. Important things to include are: reason for termination, date of termination, benefits available after termination and severance pay schedule, if offered.

Some best practices management uses include:

1. Require that employees read and sign the discipline policy when the employee is hired. This will avoid problems later on should the employee be terminated.
2. Communicate the specific reason for the termination. This direct communication clears up any confusion.
3. Try to place an employee elsewhere in the company prior to termination. It's good for morale and may mitigate any legal issues later.
4. Present the employee with important information regarding what to expect after the termination.