Key Considerations When Terminating an Employee

5 min

Terminating an employee is never easy. Even when a worker isn't working out, no one enjoys saying "You're fired." At the same time, retaining an employee who has performance problems sends the wrong message to the rest of your workforce and can make everyone's lives harder.

Planning an employee termination requires balancing a host of legal, practical, and emotional considerations. Prudent employers will consider the following questions, among other things.

Is there a valid reason to terminate this employee?

Most states recognize "employment at will," meaning that either the employee or the employer can end the employment relationship for any legal reason, with or without cause. Improper reasons for terminating someone usually include, among other things, discrimination and retaliation for exercising certain rights (such as taking FMLA leave). Some states have additional protections for employees, such as prohibiting termination of an employee for engaging in lawful off-duty conduct.

But even if the law permits you to fire someone just because you don't like them, that doesn't mean you should. It is usually best to terminate an employee based on specific behaviors, such as attendance issues, persistent performance issues, or a violation of your policies.

Employers should also carefully consult any individual employment contract or collective bargaining agreement governing the relationship with the employee. Such agreements, if they exist, may override the at-will employment relationship and could dictate that a person can be terminated only for certain reasons or has additional rights when they are terminated.

Is notice or "progressive discipline" required?

Absent an employment contract or collective bargaining agreement, a notice period usually isn't required to terminate an employee. The same is true for "progressive discipline" – unless your policies or a collective bargaining agreement require graduated discipline steps, you can jump straight to terminating an employee without giving them a warning first.

Ideally, however, employees should not be surprised by the termination. If the employee is being terminated for poor performance, the employer should have had several conversations with the employee about the performance issue and given them the opportunity to show improvement. This may include placing the employee on a performance improvement plan or conducting more frequent performance reviews. Then, by the time you have the termination meeting, the employee should not be surprised that they aren't meeting your expectations.

Note that the way you treat the employees you let go impacts the employees you want to keep. If your workforce sees that your company routinely conducts surprise terminations, even your best employees will live in fear that they'll be next.

How do I have the termination meeting?

Termination meetings are difficult for everyone involved. Still, you should do your best to deliver the news face to face. If you are terminating a remote or mostly remote employee, try to use the most personal form of communication available (such as videoconferencing or a phone call).

At the meeting itself, it is best to have two people present (usually the employee's supervisor and Human Resources). Communicate the company's decision in a kind but firm manner.

Explain how the employee will receive their final paycheck (check your state's laws to make sure you send it at the right time) and benefits continuation information, if applicable. Make sure you are prepared to give the employee any necessary documentation during the meeting or as soon as the meeting is over. Note that some states require that employees receive specific documents at the time of their termination, such as a termination letter or information about worker's compensation.

Is severance required?

If the person being terminated has a contract that specifies a severance benefit, then you are bound to follow the terms of the contract. Similarly, if you have a policy that promises severance to certain departing employees, you will need to follow the policy.

Otherwise, there is generally not a legal requirement to pay severance to a terminated employee. Some employers will choose to voluntarily pay severance to assist an employee with their transition to new employment. Employers may also choose to pay severance in exchange for a signed release where a terminated employee promises not to sue. If you are paying severance, you should consult with legal counsel to make sure you have a severance agreement that suits your needs.

What should I tell the rest of the team?

After terminating an employee, it is important to talk to your team about the decision and the implications for them – for example, do they need to give the weekly report to a new individual? Sometimes the reasons for termination will be evident to the people who worked with the employee; sometimes the picture your team has will be incomplete. Either way, you need to balance explaining why an employee is no longer a part of your team with protecting that person's privacy and dignity.

To ensure that terminations have a minimal impact on morale, employees should understand how performance problems are handled in general. You can note that you don't want to get into the specifics of the terminated employee's situation, but inform staff who express concern that you generally have multiple conversations with employees about improving their performance before a termination decision is made.

My company did everything right; can the employee still sue me?

Even when it seems you did everything right, it isn't uncommon to receive a discrimination or retaliation complaint after an employee termination. Even so, taking these precautions and keeping good supporting documentation can go a long way in preventing such claims and will make defending any complaint much easier.

Still have questions? Please contact the authors of this alert or any member of Venable's Labor and Employment Group.