11 Steps to a Seamless Employee Termination Process

As much as we all hate employee terminations, they happen. What doesn’t have to happen are the administrative headaches and potential legal problems that come from inconsistencies in your company’s termination process.

If you’ve made the determination that your employee’s behavior warrants termination, it’s critical that each manager follows your company’s termination process to ensure consistency, which will help prevent legal problems. I recommend the following steps:

1. Review all previous documentation (both verbal and written) for corrective action.

Be sure it’s adequate and supports the decision; an employee should never be surprised by a termination.

2. Explore protection status.

Determine whether the employee is a member of a protected class, on FMLA leave, or out on workers’ comp. Employers should proceed carefully in any of these situations and contact their Stratus.hr HR expert prior to taking action.

3. Consider how the termination will affect workplace morale.

Before terminating, determine how workloads will be distributed and have a communication strategy ready to deploy.

4. Review how much remaining PTO/vacation leave the employee has.

Find out if you’ve paid this out previously; if so, you’ll need to be consistent or have a legitimate reason for not doing so in this situation (be sure to document the reason for future reference/consistency). If this is your first time terminating an employee with a PTO balance, check your state’s requirements on whether this must be paid out upon termination. If there are no state regulations, you may need to establish your company’s policy on if/when you pay out PTO balances.

5. Determine severance pay requirements.

Learn whether severance pay has been given for a comparable situation previously at your company, and/or if severance must be offered per the termination reason. (Some states may require severance due to a facility closing or layoffs.)

6. Gather proprietary devices and information.

Communicate with IT to ensure devices that have been issued to the employee are accounted for and retrieved upon termination. All company data should be removed from any device that doesn’t belong to the company.

7. Write a termination letter that states the employee is being termed.

Consider including a short explanation for the reason of termination, which may help with a future unemployment claim, and include information about forthcoming items to watch for (COBRA, severance pay, any due time or wages, etc.), as well as details about what will happen to their health and other insurance benefits. Be sure to keep a copy of the termination letter for your records!

8. Consider offering a “Release of Claims” waiver.

This releases the company from any potential harassment or discrimination claims in exchange for severance pay. (Some states allow workers a specific length of time to review and sign these forms, so be sure to check state statutes.)

9. Conduct the brief termination meeting during an optimal time.

Meet in person with the individual during lunch or when fewer people are in the office to give them some dignity and privacy.

10. Allow the employee to collect their things and exit the building.

If you anticipate any problems, consider having security or local law enforcement help escort the employee out of the building.

11. Finalize the process by reporting the termination the day it happens.

For Stratus HR clients, this means terming the employee in our HRIS the day the employee is termed.

Potential Problems from Delaying Termination Paperwork

Occasionally, the last step is overlooked and employees aren’t reported as termed until days (or weeks) later. Missteps with punctually completing paperwork post-termination could land you in hot water. When employees aren’t termed in your records and reported the day termination occurs, any of the following could happen:

• Final paycheck delays

  Employees will not receive their final paycheck within the required timeframe outlined in state law. While this could easily create berating and backlash on social media and review websites, it could also lead to legal issues.

• Problems with unemployment

  A former employee who is otherwise qualified will not be able to collect unemployment until the state is notified they’re no longer employed.
  
  

• Overpayment of benefits

  Employees with benefit plans will continue to have deductions pulled for benefits because the carrier will not have been notified they’ve been termed. When there is no money from an employee’s paycheck to pay for their portion of benefits, the company would likely pick up the tab for both the employer and employee’s portions. Unfortunately, this will continue until the employee is finally and officially termed in the system.

Thoroughly completing all 11 steps of the termination process will help maintain consistency, prevent unnecessary legal issues, and create a final positive experience for your workers. For more information, please contact your certified HR expert. Not a current Stratus HR client? Book a free consultation and we'll contact you shortly.