Skip to main content
Business Protection Bulletin


By May 1, 2008No Comments

One of the most stressful situations employers have to face is dealing with employee terminations. Even when employees leave of their own free will, there are repercussions in the workplace that affect the departing employee, the employer, and the employee’s co-workers. And when employees leave due to being fired or layoffs, it can be even more disruptive.

When you are faced with employee terminations, it’s important to make sure you minimize any negative effects on your business and your remaining employees. If you manage the situation carefully, you can reduce the impact and the risk of encountering legal issues.

A proactive strategy can help. As you consider a comprehensive employee termination strategy, it can be helpful to note that terminations usually fall into one of three categories:

  • Employer ending the employment relationship for cause due to poor performance or behavior.
  • Employee ends the employment relationship voluntarily.
  • Employer ends the employment relationship for economic reasons unrelated to employee performance.

In some instances, specific termination types call for certain responses. There are also general guidelines that make sense for all types of terminations. Here are some tips that might help:

Employer ends employment relationship for cause

  • Protect yourself and your employees: Sometimes, the wisest course of action is immediate termination — for example, if an employee steals or is a danger to your business and/or other employees. In this case, immediate termination might be justified. However, make sure you understand the law and your responsibilities fully.
  • Counsel employees and document your efforts: Some poor performers deserve a second chance. Ensure that employees understand what is required of them, and make sure you document warnings and counseling so that your business is protected if you do ultimately have to terminate the relationship.

Employee ends employment relationship voluntarily

  • Make sure you understand why employees are leaving: If you don’t already have an exit interview policy, consider implementing one. It’s a great way to find out how your business stacks up against competitors on the benefits and compensation front. It can also be a good way to nip management problems in the bud.
  • Take advantage of counter-offer opportunities: If a valued employee is leaving, you might be able to keep them on board if you take the time to discuss the reasons for the departure. Turnover is expensive, and a pay raise might be far less costly than recruiting and training a new employee.

Economic-related terminations

  • Let employees know they are valued: Layoffs are difficult, but letting employees know they are appreciated and treating them with respect can make the transition less challenging. If you can provide a good severance package and help in securing another job, this will also help.
  • Keep employees informed: Reductions in your workforce affect everyone — your management team, employees who are being let go and employees who will remain with you. Keeping the lines of communication open can help reduce anxiety.

All types of terminations

  • Have a process in place: Follow a set procedure so you treat all employees equally. A checklist of termination steps can be helpful.
  • Communicate effectively: It’s important for all employees to understand what’s expected of them so that you avoid misunderstandings.
  • Talk to a lawyer: The employer-employee relationship is highly regulated. If you suspect there might be guidelines you’re unsure of, consult an attorney.

The last word

If you’re an employer, chances are you’ll have to deal with employee terminations at some point. They are rarely pleasant, but you can manage the fallout by planning ahead and making sure you have appropriate procedures in place. By taking a proactive approach, you can minimize the effect on your workforce and protect your business.