Here are several critical things leaders should know before firing their employees
Terminating an employee is never a simple matter. While employers reserve the legal right to dismiss their employees at any time, HR leaders and managers must be careful that their decision to fire someone does not violate federal laws or statutory sanctions.
Due to public policy exemptions and some state-specific laws, at-will employment does not mean employers can simply dismiss their subordinates on a whim. The act of firing is straightforward, but you need to do it properly with sufficient documentation to avoid a potential lawsuit.
No good leader takes pleasure in letting go of an employee, but you should know how to protect yourself and the company whenever the need arises.
As such, here are seven important questions that HR leaders commonly ask about employee termination.
- What is at-will employment?
- What is termination with just cause?
- What can’t I fire an employee for?
- How do I terminate an employee for poor performance?
- How do I properly fire an employee?
- Can I terminate an employee with mental health issues?
- Are terminated employees entitled to a severance package?
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1. What is at-will employment?
To understand employee termination in the United States, we need to learn more about the prevalent laws and exemptions governing employment.
Most employment in this country is “at-will.” This means that both the employer and worker can terminate the employment at any time.
Technically, organizations can fire someone tomorrow morning or effective immediately if they want. Similarly, your information technology officer can quit the next day even if the short notice puts you in a tight spot.
However, employment law imposes some limits on at-will employment. For example, the Civil Rights Act of 1964 stipulates that you cannot fire workers due to their religion, gender, race, or nation of origin.
You also can’t fire people if it violates a state’s public policy doctrine. For instance, workers can take their time off for jury duty or if they are subpoenaed to appear in court – even if it’s to testify against your company.
Lastly, the terms stipulated in the contract or a binding agreement between the company and the individual overrides the at-will employment rule.
In some cases, an implied contract or an oral agreement may supersede the at-will rule. Courts may rule that employee handbooks and various documents signed by the employee constitute an implied contract between the company and the employee.
Similarly, you can be sued for wrongful termination if you previously made a labor union contract and then fired a union member without just cause.
If a wrongful termination is proven, the court will require you to award monetary compensation or reinstate the dismissed employee. In some cases, you will be obligated to do both.
2. What is termination with just cause?
Termination with just cause or “termination for cause” occurs when an employee makes a severe error of judgment, action, or behavior at work.
The action often results in undesirable outcomes like financial losses or compromising the safety of the workplace and the well-being of their coworkers. Leaders may fire a subordinate for grave misconduct and specifically note the just cause on their termination letter.
Commonly reported just causes include breach of the employment contract or company policy, violence or threatened violence, falsifying records, watching pornography while at work, and stealing company property or money.
Insubordination may also qualify as a just cause. This happens when a leader gives a reasonable, lawful order that the employee acknowledges but refuses to follow. Nevertheless, termination is typically used as a last resort next to other disciplinary actions to address insubordination.
Still, it’s difficult to produce an exhaustive list of just causes for dismissal. Tricky cases include workers who exhibited grave misconduct outside work or those who were convicted of crimes.
If you’re planning to terminate an employee with just cause, you may wish to consult your company lawyer for extraordinary situations.
The burden of proof lies on the employer for such cases, so you need to supply sufficient evidence to avoid a wrongful termination lawsuit.
On the other hand, it’s also possible to terminate workers without cause. This means they are being let go due to cost-cutting, restructuring, or poor performance instead of grave workplace misconduct.
3. What can’t I fire an employee for?
Losing a wrongful termination case can cause a lot of headaches and cost a lot of money. As such, make sure that you’re not firing anyone due to age, sex, race, or other illegal reasons.
As previously mentioned, you cannot dismiss workers if they are protected by public policy or they are performing public policy duties.
The District of Columbia and most states recognize public policy as an exemption to the at-will rule, except Alabama, Florida, Georgia, Louisiana, Maine, Nebraska, New York, and Rhode Island.
Additionally, employees have the right to report or complain about bullying, sexual harassment, and unfair practices in the workplace – so you cannot fire workers in retaliation under civil rights laws.
Common law also protects workers from dismissal due to retaliation if they disobey their employers who instruct them to do an illegal or immoral act.
There’s also the Age Discrimination in Employment Act of 1967 (ADEA) that protects employees from biases based on age when it comes to hiring, promotion, compensation, and discharge. This applies to workers of ages 40 years and above.
People with physical disabilities, medical condition, mental health issues, and pregnant women are also protected by the Equal Employment Opportunity Commission (EEOC).
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4. How do I terminate an employee for poor performance?
There’s no one-size-fits-all formula for firing someone, but you can make vital preparations to make the conversation go as smoothly as possible.
Properly terminating an employee due to poor performance can be summarized into the following steps:
- Document evidence regarding the employee’s performance.
- Review the job description and set clear expectations with the employee.
- Follow up with the employee regarding their progress.
- Terminate the employee if they fail to meet the requirements.
First of all, make sure that the decision is objectively based on measurable performance issues. And even if it is, you have to be careful with giving out any statement that can be twisted into a wrongful termination case against the company.
An employee can use your words and file a complaint to the EEOC saying that they were fired due to discrimination or retaliation.
Even if the claims are unfounded, these shift the burden of proof to the employer. You need to be able to produce evidence that your decision is objective and non-discriminatory. That’s why documenting everything is essential.
Talk to the employee about their current suboptimal performance and lay down the targets that they need to deliver. Explain that you are implementing a performance improvement program because they are not meeting the company’s quality standards.
Additionally, you should reiterate that delivering these before their respective deadlines with the expected quality is part of their official job description.
Follow up with them on a regular basis and discuss their progress or shortcomings. Remember to keep a paper trail, such as evaluation forms and emails acknowledged by the employee.
Then, you may consider retaining the employee if you notice a significant improvement in their performance. Otherwise, prepare for terminating the individual if he or she fails to improve.
At this point, getting fired will no longer come as a surprise to the worker. The next step is breaking the bad news.
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5. How do I properly fire an employee?
The conversation should be swift yet gracious. You can avoid bungling the termination by practicing beforehand, writing down the most important things you have to say, and sticking to your script.
“This is not a counseling session,” says Harvard Business Review (HBR). “It’s the announcement that an irrevocable decision has been made to discharge the individual.”
As such, you need to be direct to the point. Ask the employee to enter the room, sit down, and listen closely because you bring bad news. This will set the person’s expectations and prepare them for what’s coming next.
Then, say that they are terminated in the past tense and state the reasons in just two to three sentences. Avoid using statements like “you will be terminated” or “we are considering firing you”.
Tell them that the decision is final, and it’s the result of previous performance evaluations and the employee’s inability to meet the company’s expectations
Additionally, you should avoid saying justifications like “you should have known” and groundless reassurances like “this is probably for the best” or “I know how you feel.” It’s best to speak in a calm, professional tone and stick to the facts.
Give the employee some time to process the information and listen to what he or she has to say. Having a box of tissue nearby is a good idea. Then, wrap the conversation graciously by thanking them for their contributions to the company and escorting them outside.
Lastly, you should consider the timing of breaking the bad news. Doing it early in the week can give ample time for the terminated worker to find another job right away. On the other hand, doing it on a Friday can minimize disruption to the rest of the staff.
“For months you’ve probably put up with less-than-stellar performance in hopes that the situation would somehow correct itself,” says HBR. “Now that the end is at hand, plan the transition so as to do the least damage to company and coworkers.”
6. Can I terminate an employee with mental health issues?
The simple answer is yes, but you need to follow a fair process and ensure that you are not dismissing a worker solely because of his or her mental impairment.
Employees with mental health problems like depression, bipolar disorder, or post-traumatic stress disorder (PTSD) are protected by the Americans with Disabilities Act (ADA). These also cover individuals with brain disorders like dementia.
Moreover, rejecting employees for a job promotion or forcing them to take a leave simply because they have mental health conditions is punishable by law.
“An employer doesn't have to hire or keep people in jobs they can't perform, or employ people who pose a direct threat to safety,” says the EEOC. “But an employer cannot rely on myths or stereotypes about [the employee’s] mental health condition when deciding whether [they] can perform a job or pose a safety risk.”
The process of firing an individual with mental health problems is the same as terminating someone due to poor work performance. Outline specific goals that they have to meet as part of their performance improvement plan, which will serve as a basis for retaining or terminating them.
You should also provide reasonable accommodations to help the employee perform better, especially if they disclose their mental health problem and ask for it.
According to the ADA, accommodations may include allowing them to work remotely, moving their shift to a different time, or other forms of assistance that the company can reasonably afford.
In case of a wrongful termination complaint, the company must be able to provide proof that the worker has failed to perform the functions included in their job description.
Of course, you must take immediate measures if the worker poses a threat of physical harm to themselves and colleagues in the workplace. Call psychiatric professionals to take care of emergencies and consider suspending the employee while you plan the best course of action.
For such cases, continue consulting with mental health professionals about the best reasonable accommodations should you choose to retain the employee. Otherwise, terminate the employee if experts deem that they are not fit to work.
Read more: Employees behaving badly: When should HR step in?
7. Are terminated employees entitled to a severance package?
The short answer is no. According to the US Department of Labor, there is no provision in the Fair Labor Standards Act for severance pay.
However, providing a severance package is mandatory if it’s included in your employee handbook or other company documents signed by the employee.
Severance packages are commonly offered to employees who retire or got laid off due to downsizing. In most cases, people terminated due to just cause are not entitled to this privilege.
Companies often provide severance pay to assist workers while they look for another job. It is also a way to maintain a positive image and positive relations with their remaining employees.
Employers typically use this as an opportunity to establish severance agreements with the worker. For example, you can ask them to sign a non-disclosure agreement (NDA), non-compete clause, or a statement that they won’t disparage your company before receiving their severance pay.
You should also note that the employee may negotiate the terms of severance. The leadership decides whether the request is reasonable and affordable.
For example, the dismissed worker may request to keep their old work laptop after wiping out company data. Some may also ask whether they can waive signing a non-compete clause and sign just an NDA, in case they have a good chance of getting hired by a competitor company.
Read more: What can an NDA not be used for?
As for the monetary amount, it usually depends on the number of years the employee worked for the company. The package may also be extended to include payment for accrued vacation days, health insurance, and outplacement assistance.
Remember that severance pay is taxable. Depending on your employment policy, you may give it in a lump sum or distribute the payment over a few months. During this period, the individual will still be included in the payroll even if he or she is already unemployed by your company.
