ICS Magazine

Letting the Ax Fall

May 19, 2004

One part of running a business that we don't like to think about is that, sooner or later, things don't work out as planned and you have to let an employee go.

The termination of an employee can be one of the more difficult aspects of being in business. There's a lot more to it than just saying "You're fired"; you are not Donald Trump. Before terminating an employee, make sure it is for good cause and that you have documented your efforts to correct the improper behavior. Failure to have this documentation available could be very expensive to your company in the form of unemployment benefits or even a wrongful-termination lawsuit.

The whole process actually starts before the employee is even hired. Company policies outlining the types of behaviors or offenses that would lead to termination should be established. This would include things such as theft, dishonesty, excessive absenteeism (define excessive), insubordination, un-insurability (like for a driver), or sexual misconduct. These policies, spelled out in as much detail as possible, along with other company rules and policies such as dress code, vacation-and-leave policy and benefits, should be written down in a company employee handbook that each new hire receives and signs for. This way, they are declaring in writing that they have received the policies and agree to abide by them.

Similarly, all work performance expectations should be clearly outlined in this written job description. If goals or quotas are required, they should be in the job description. The more detailed the job description, the better.

With this documentation in place, then when the employee violates one of the policies or fails to meet performance expectations, he or she cannot say they were not aware of what was expected of them. Many companies also adopt an "at will" employment policy that says that termination can occur "without cause," given the appropriate notices. However, even in an "at will" company, the various behaviors that would lead to automatic termination are listed in the handbook.

When an employee violates a policy or fails to perform according to expectations, most companies have a multiple-step program that is completed before termination results. The first step is to counsel the employee, point out the violation or discrepancy, and advise them that it needs to be corrected. The employee signs a form acknowledging the counseling and agreeing to correct the problem. And the form is placed in their employee file.

If the behavior or performance problem reoccurs, the employee is generally counseled again and possibly suspended for a period of time. Again, a form outlining the nature of the problem and documenting the counseling session is signed and placed into the employee's file.

A third occurrence of the breech of policy or lack of performance will generally result in termination. By following this type of policy, the terminated employee cannot say they were not given a chance to correct their behavior or improve their work performance.

Sometimes the offending behavior is cause for immediate termination without going through this documentation process. Examples of this type of situation would include theft; illegal behavior such as drug use; sexual misconduct; or acts of violence. These items should be listed in the employee handbook as "zero tolerance" behaviors that will lead to immediate termination.

While we never like to think that someone we are hiring will ever need to be terminated, it is a fact that this situation does, and probably will, occur. Protect yourself and your business by creating and instituting the ideas and procedures outlined here. When the time comes, you will be glad you took the time to prepare.