Skip to Main Content Back to Top
Home Blog How to terminate an employee

How to terminate an employee

Some employees just aren’t a good fit. Whether it’s because of gross misconduct, poor performance, or internal structural changes at the company, sometimes you need to terminate an employee.

When this happens, it can be uncomfortable for everyone involved. The employee will obviously be upset about being terminated or laid off. The hiring manager may feel guilty about it, as well. Even if it goes well, terminating an employee is an unpleasant experience all around – but if it goes badly, it can become an absolute HR nightmare.

So, what’s the best way to terminate an employee? The following tips can help you avoid making a bad situation worse.

Know the laws before you terminate someone.

Even if you live in a state with at-will employment, employees have some rights. Make sure your reason for terminating the employee does not violate the EEOC, the ADA, or other state or federal laws.

Sometimes, the legal situation may not be clear. For example, imagine you want to terminate an employee over marijuana use. Marijuana is illegal on the federal level, so you feel confident that the law is on your side. However, marijuana may be legal in your state, and the employee may be using medical marijuana to treat a disability. After you terminate him, he may sue your company for wrongful termination and violation of the ADA.

This isn’t just hypothetical. Cases like this have been playing out in courtrooms across the country. Marijuana is leading to especially complex issues because of the conflict between evolving state laws and federal law, but there may be other gray areas, as well. When in doubt, consult a legal expert before you terminate an employee.

Check your contracts and employment handbook.

In addition to state and federal laws, you also need to make sure you’re adhering to the terms of the employment contract and your company’s employee handbook. For example, does the contract state the length of employment? Does it state that the employee is entitled to severance pay or other benefits? Be consistent and follow company policy.

Don’t jump the gun when terminating an employee.

Employee turnover can be a major expense. If an employee is having performance problems, provide performance reviews, warnings and assistance before resorting to termination. You may be able to address the issue and help a struggling employee become a valuable asset to your company. And if things don’t work out, at least the employee will know the reason for being let go, and you’ll feel confident that you did everything you could.

Document issues thoroughly.

Keep documentation of any violations and company investigations into violations. This may be necessary later, especially if you are terminating an employee for gross misconduct. Also keep records of the performance reviews, warnings, and training you provide.

Meet in private.

Getting terminated may be embarrassing for employees. They probably don’t want all of their coworkers to overhear it. The termination may also upset the other employees. They may feel bad for their coworker, or they may worry that they’ll be next. Either way, workplace morale may suffer as a result.

Avoid terminating an employee in a busy office where other employees will hear everything that’s said. Break the news somewhere private, such as the employee’s office or your office.

Strike the right tone.

This is no time to beat around the bush. You need to be direct and straightforward. Otherwise, employees might think there’s a chance they can salvage their position.

Be clear about your decision to terminate the employee, but also be compassionate. Stay calm and be ready to deescalate the situation if things get tense.

Watch your word choices.

Even if your reasons for terminating the employee are completely legal and justified, a few wrong words can make it seem otherwise. Avoid saying things that could be misinterpreted or lead to claims of wrongful termination.

To see how your words could backfire, imagine this situation. You’re terminating a woman for repeated poor performance. She’s upset, and you feel bad for her, so you try to soften the blow by stating that it’s really a good thing because now she can spend more time with her children. You’re just trying to help her look on the bright side, but she misinterprets this comment as suggesting that you’re terminating her because she’s a mother. Now she’s suing for wrongful termination, and your words may be used against you.

The longer you speak, the more likely you are to say something you’ll regret. Keep it brief and stick to the facts.

Make sure you have everything you need.

Let’s say you need to terminate an employee who’s working on an important project. A month later, you realize that you have questions about the project, and the employee you terminated is the only person who has the answers you need. That puts you in a difficult spot.

Avoid this scenario by making sure you have everything you need – including crucial logins, project statuses, and other information – before you let an employee go. Don’t let employees take company property with them when they clear out their desks, and if they have anything at home, arrange to get it back immediately.

Change your passwords.

If the employee you’re terminating has access to sensitive files, make sure you sever access when you terminate their employment.

The New Haven Health Department learned this the hard way. According to HHS, the City of New Haven agreed to pay $202,400 and to implement a corrective action plan after a former employee returned to the health department eight days after being terminated and was able to log into an account and download the protected health information of hundreds of individuals.

Security is especially important for companies that are subject to HIPAA regulations. However, all companies should take security seriously. For example, a disgruntled former employee may decide to get revenge by deleting files or stealing financial information from customers. Prevent this from happening by blocking the employee from accessing equipment and programs after termination. Change all passwords that the employee had access to.

Fulfill your legal obligations.

The terminated employee may be entitled to unemployment benefits, COBRA continuation health coverage, and any severance package provided under the terms of the contract.

You will also need to provide terminated employees with their final paycheck. According to SHRM, the final paycheck is due on the next regular payday under federal law, but state law may require faster payment. The paycheck cannot be withheld because equipment has not been returned, but the employer may be able to deduct the cost of equipment, depending on state law.

The Bottom Line

Managing your human capital is complicated – even when it involves something as simple as terminating an employee. Wish you could delegate the heavy HR lifting to a team that navigates HR issues every day? You can! Learn more about our HR Services.

Not sure where to start? Talk to someone who wants to listen.

A great plan starts with a conversation. Let’s talk about what you need.

Let’s Talk

Request a Quote

Woman looking sideways to window in design office
Higginbotham H logo