Seven Ways to Minimize Employee Termination Risks

Ideally, every employee termination – voluntary and involuntary – would go smoothly. Employees would hopefully either give notice and exit gracefully or, in the case of an involuntary termination, a handshake and a “best wishes in your future endeavors” conversation would take place before the handing over of office keys and a name badge.

Of course, this is not always the case, especially when it comes to an involuntary termination. Voluntary terminations can appear to straightforward, but even those can have unintended or unpleasant issues afterward.

Seven tips to help minimize risk when it comes to terminations:

  1. Get it in writing. An employee may leave you on the best of terms, but be sure to get the intended final work date in writing. It will clear up any possible confusion as to final pay, benefit end date, and any future inquiries from outside sources into their employment history.  If the employee gives two weeks’ notice and you opt for an earlier release, be sure to document this information as well. For involuntary terminations, a factual, written account of the reason for the termination (including dates and timeline of all counseling sessions, policy violations, and performance management documents) is essential along with a record of the last date the employee worked and was paid for.
  1. Agree on Transition and Communication. The transition plan and internal communication will be important. With an employee leaving, those remaining on the team will have questions about the work that will still need to be done if no one has been hired to fill the role, and more than likely will also be speculating on why the employee left. If circumstances allow it, be sure that you work with your soon-to-be-ex employee on when and what will be told to co-workers, vendors and others he or she works with on a regular basis.

If the termination is involuntary, less is more in terms of letting others know under what circumstances your employee has left the company. The details should only be shared on a need-to-know basis.

  1. Check state requirements. Many states have requirements as to the timing and method of final checks and what can and cannot be deducted. Does the state require final payment of any accrued, unused PTO or vacation time? There also may be required final paperwork and notices that must be given to all exiting employees, regardless of the reason for the termination. If employees don’t stick around long enough to collect what they need to, sending it via certified and/or overnight post to stay in compliance with any state or local laws is recommended.
  1. Settle all IOUs. Is the employee still owed any commissions, guaranteed bonus payments, or due an expense reimbursement? Does the employee owe you a balance on a loan or tuition reimbursement? If so, hammer out a plan for payment with the employee prior to the last day (if possible) so expectations are clear. (Caution: Some states do not allow a deduction of balances owed to a company by an employee on a final check.)

If the termination is unexpected, make sure you know what is still owed to the employee – or to you, the employer – and try to get it resolved as soon as possible. Communicate any pending payments with the employee to ensure that you are both on the same page.

  1. Get paperwork in order. Go through the personnel file to ensure it is in order and can be closed out with all documents within once the termination takes place. Applications, offer letters, notices of increases, signed policy acknowledgements, performance review documents, counseling session documentation and final termination information – among other items – should all be in the personnel file. If there are multiple copies of the file, such as a “desk file” as well as a personnel file, paperwork should be consolidated and duplicates should be removed and discarded. Many states have requirements as to how long to keep personnel files and what they should contain.
  1. Keep Final Conversations Short – and Civil. For involuntary terminations, the final meeting should be a short one and in a private area away from other employees. Ideally, the employee’s direct manager should handle the conversation and have an HR professional or another neutral party in the room as a witness. The primary goal of the meeting is to let the employee know that the employment relationship has ended and what he or she can expect as a result.  In doing so,  be sure to use language and tone that is professional and respectful. If possible, prior to the meeting, arrange for someone to turn off the employee’s computer access during the meeting; any personal computer files can be sent via thumb drive to the employee at a later date.
  1. References – to share or not to share. Many employers have an internal policy addressing what can be shared in regard to former employees if called for a reference. Even if the employee leaves on a voluntary basis, it is important to be cautious when discussing past employee performance with another company who is looking to hire him or her. If an employee was terminated for cause (theft, gross policy violations, negligence) you may want to consult with an employment attorney to determine if not sharing this information with a prospective future employer would put you at risk

While a smooth termination process is never guaranteed, there are a lot of factors that can affect how much scrambling a company might have to do long after an employee leaves. A bit of preparation in advance can go a long way toward minimizing possible risk when the employment relationship ends.

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