Need to Terminate an Employee? Here’s How to Get It Right!
Employers don’t typically hire employees with the intent to terminate their employment, but sometimes it’s the only feasible option or simply the best course of action for the organization. Many circumstances can lead to a termination, such as surreptitious recordings [see article by Dave O’Neill], breaches of the employment contract, or other considerations that warrant termination without cause, or in plain language, at no “fault” of the employee.
Terminations are not black and white. Many factors contribute to the employee’s specific circumstances and, in turn, the financial impact on the employer. The legal obligations during terminations directly translate to dollars in the employee’s pocket. Still, there are also human factors that can significantly impact how the news is taken and, therefore, the outcome of the termination.
Doing It Right
Effective terminations actually start with effective management. Utilizing soft skills such as showing empathy, kindness, and respect throughout the employment relationship [and during a termination] will reduce the liability if the employment ends in a termination. Here is how effective management can impact the bottom line:
- The employee is likely to be offered a more generous/reasonable/fair termination package without the need for negotiation.
- The package is more likely to include additional considerations based on the employee’s circumstances, such as transition services, salary continuance or benefit continuance.
- Any offered package is likely to be perceived more favourably based on the established positive relationship.
- The employee is less likely to want to pursue action just to prove a point or get as much as possible out of the termination.
- The employee is less likely to feel like the employer “owes” them more.
- The employee is more likely to sign any release required and abide by the terms.
- The employee is more likely to speak favourably about the employer post-termination, impacting future business opportunities.
- There is a smaller chance of disengagement or souring relationships with remaining employees.
- Fair treatment of employees can reduce damages owed if the employee does pursue legal action.
While some of these hypothetical impacts are hard to measure, they can have significant financial implications. For example, consider the impact of one soured employee that is left after their colleague was terminated and was perceived to be treated unfairly. That employee’s attitude could influence an entire department or even organization, and their negativity could lead to the need for a further termination or resignation, triggering yet another cycle of avoiding termination pitfalls, cost of termination, cost of rehiring and training, and the threat of legal action. Legal actions from termination decisions can cost an employer up to 2 years of the employee’s compensation in damages, plus legal costs.
Take the Best Way Forward
The best course of action to avoid unnecessary costs, resources and stress is to start from the beginning of an employee’s employment – take the time to hire the right people for the right roles and then ensure that there is a strong emphasis on a positive, value-based workplace culture. From there, effective management of both good and poor performers is critical for maintaining a strong culture.
As mentioned, each employee’s circumstances differ, so it is important to approach terminations carefully to ensure legal obligations are met — and it is best practice to seek legal advice with each case. Human Resources professionals can also be utilized to assist with performance management and any other (grey) considerations for each situation.