Firing an employee is never a happy task, but it definitely has to be done correctly. You want to be able to have confidence in your decision and act free of impulsiveness. There are also a few legalities to consider. By making a hasty decision based on judgment or hearsay, you’re making your company vulnerable to lawsuits on grounds of wrongful termination.
Fred S. Steingold, a lawyer specializing in business law and author of The Employer’s Legal Handbook: Manage Your Employees & Workplace Effectively, says that most small businesses hire “at will” employees—meaning free of a contract.
“There are some limits, however, on your right to freely fire an at-will employee. Some of the limits are based on statutes prohibiting things like racial or gender discrimination; other limits are founded on ‘public policy.’”
Here are a few things Steingold says you should consider before firing an employee:
Have a valid reason to fire the employee—and communicate that reason. The safest approach any time you fire someone is to be sure you have a legitimate business reason—a reason you have thought out and documented. If challenged on a particular thing, you should be able to show, for example, that the employee did not adequately perform specific job duties or that the employee violated a clearly stated company policy.
Look over statutes and be sure you aren’t falling in line with one of them. If you discriminate illegally in firing an employee, a statute may give that employee the right to sue you for wrongful discharge on that basis. Aside from discrimination, some statutes include gender and pregnancy, sexual orientation, complaining about safety or health conditions, and refusal to submit to a lie detector test.
Review contractual commitments. Before you fire an employee, check into whether you or anyone else in the company, made an oral or written contractual commitment that may limit your right to fire. Consider the following: When you hired the employee, did you make any statements about job security? Does your employee handbook or other written policy or memo make any promises about job security? Is there a written or oral contract or document (including a hiring letter) that promises the employee a job for a fixed period of time?
Be aware of the alternatives to firing. Occasionally, there are other alternatives to firing a worker—alternatives that can help you avoid the risk of a wrongful discharge lawsuit while at the same time providing the spared employee with a chance to improve. One possibility is to redesign the employee’s job to eliminate the problem areas. Or you may assign the employee to another job.
For example, an employee who has the tendency to quarrel with customers, but is otherwise organized and efficient, might do an excellent job working alone in the warehouse. If there’s a personality clash between an employee and a supervisor, you may be able to assign the employee to another supervisor. If a personal problem is at the root of an otherwise good employee’s difficulties, you might offer to pay for at least a limited amount of counseling—or offer the employee a leave of absence to get help with the problem.
Try to end things on a good note. There are a few ways Steingold believes will help remove any—or at least some—negative feelings when firing someone and maintain the morale of the business. One way is offering the employee a chance to resign.
“Permitting the employee to resign gives the employee the opportunity to save face—which in turn, may make the employee less bitter about the termination and less hostile towards your business," Steingold says. "Be aware, however, that if you give the employee a stark choice between resigning and being fired, it’s probably not legally considered a voluntary termination.”
Other ways to keep things on a positive note are offering the employee a favorable reference or help finding a new job. “You may be able to inform an employee of openings elsewhere that would be better suited to the employee’s skills and personality," Steingold says. "Or, if it’s a longtime employee to whom you feel a lot of loyalty, you may even consider footing the bill to have a personnel agency assist the employee in finding another job.”
Read more about hiring and firing issues here.