Termination Made Easier

Posted on November 1, 2010 in Compliance, Consulting

Firing an employee may seem simple enough, but missteps in the termination process may initiate a slippery slope to the litigation process. When dismissing an employee, we suggest that employers: (i) succinctly state the reason for termination; and (ii) develop a professional process for firing an employee. Focusing on these key points, which are discussed in this newsletter, can prevent the dreaded trip to the courthouse.

An employer must have a sound reason for terminating an employee, even when the employment relationship is at-will. An employer’s right to terminate an employee at any time, with or without cause or notice, stands as a premise of American employment law (with exception to a specific agreement between the parties that changes the at-will relationship).  But “at-will” employment never suffices as the sole explanation for dismissal.  An employer should not expect a jury to simply accept “at-will” as the reason that someone lost their job. 

Instead, the employer should provide a rational explanation .The grounds for termination must be logical and defensible.  A nonsensical explanation creates suspicion; sensible explanations help people believe that the reason holds water.  Decisions that appear fair and just certainly have the most appeal.

With this in mind, employers should avoid ambiguous statements and generalizations that lack content and meaning.  Explanations such as, “We are restructuring the company,” or “We are changing the way we conduct business,”  tell your employee very little about their dismissal, leaving room for interpretation.  An employer should explain what the change is and why it is resulting in the employee’s termination; for example, “Jill, we no longer need a receptionist because we are going to use an automated answering machine.”  The explanation may seem tough, but its reasons are logical and defensible.

Similarly, as mentioned in the previous newsletter, tell the employee the facts without sugarcoating the situation.  An expression such as, “You just don’t fit in,” may leave an employee believing that they do not “fit in” because of their race or gender.   To gain a better hold on the situation, tell the employee exactly why they did not “fit in” (e.g., they were mean to people, harsh, or difficult to work with). 

An employer should test an explanation for termination by writing it out as a single sentence.  I often begin my opening statement in a wrongful termination trial with a theme slide that states the reason for termination in ten to fifteen words.  If the theme of the defense cannot be condensed to a single slide for the jury, the reason fails the test of being justifiable.  Complicated reasons are bad explanations.  If it takes too much effort to get the sentence on paper, rethinking the decision is in order.

A good explanation is a defensible explanation;  the rationale should be supported by facts.  Obviously, a record of written warnings makes this easier, but not every situation lends itself to such circumstances.  A sentence (or a few) on a termination form typically suffices.  Consider writing more than just “poor performance,” or “violation of policy.”  Instead, state exactly what the employee did or failed to do  in abuse of policy.  Some situations may require a more in-depth memorandum.  For example, if an employee is terminated after an investigation that involves multiple witness interviews, it helps to memorialize the conclusions of the investigation in a memorandum so that the employer’s basis is preserved at the relevant time. 

This leads to our discussion of the termination meeting.  An employer who has organized the reason for termination into a single sentence can (and should) begin the termination meeting by stating that reason: “Bob, we are terminating your employment today because you failed to complete the Super Important Project on time,” or, “Jill, we are terminating your employment because you were late to work on Tuesday following three prior reprimands for tardiness.”  Also, an employer who is prepared with a well-thought-out explanation will feel more comfortable delivering the news.

In a layoff context, an employer should speak candidly with the employee:  “Joe, we have to let you go because the company is not doing well.”  However, simply stating an economic reason for termination may not be sufficient.  Unless the company is shutting down operations, the decision of who to layoff and who to retain is a separate explanation in itself, one which will be discussed in a later newsletter.

The termination meeting should be short.  Nothing pleasant will come from a meeting in which someone is losing their source of income, and the decision may come as a surprise to the employee.  Debate and discussion may lead to misunderstandings; an employer should avoid the potential for controversy by keeping the meeting very brief (i.e., a few minutes).  Of course, it helps to have two persons from the company present.

If the company is offering a severance package that includes a release of claims, the package may be presented at the end of the meeting.  (Read more about severances here.)  An employer should hand their employee the severance package, which they should read at a later time; explaining the package immediately after being fired may be thought of as impolite.

No employer takes pleasure in dismissing an employee.  Even in the most extreme cases of misconduct, the position of terminating an employee remains difficult and uncomfortable.  Implementing these suggestions, however, makes the firing process less painful in the present and less likely to lead towards litigation in the future.