Personnel e.bulletin – Apr 2014
Terminations Done Right
Prepared for the PHCC Educational Foundation by TPO, Inc.
Face it – at some point you will have to fire an employee. Sometimes things just don’t work out; other times business necessity requires layoffs. Painful as they are, terminations are inevitable. Knowing that, you need to be prepared to do them right.
There are two broad categories of terminations: voluntary and involuntary. Voluntary terminations are initiated by the employee and involuntary, by the company. In either case, terminations pose difficult challenges and result in transitions that can, and do, impact entire teams. Very few practices speak as loudly as transitions about the culture of your company and consequently about your employment brand.
At a minimum, you should care about being legal and consistent in your practices. Know that terminations:
– Are governed by at-will employment – but they are not completely shielded from potential legal risk/ liability.
– Are less difficult when they are guided by written policies – versus “fly by the seat of your pants” decisions or actions.
– Have consequences to the staff who remain – your practices should be held to the highest standards for individual respect and dignity – your people will notice.
How Employment-At-Will Governs Terminations
The At-Will doctrine of employment law defines the employment relationship in most of the U.S. states (check state laws as required). Employment is considered to be “at-will” unless there is an agreement (in the form of an actual or implied contract) that the employment relationship is for a definite period of time. Being in an at-will relationship means that employment may be terminated by either party, at any time, for any or no reason.
Ensure that you have at-will disclaimers included in your:
– Employment application forms.
– Employment offer letters.
– Handbooks – handbook receipt acknowledgement.
While at-will employment broadly defines employment relationships, setting the overall context for terminations, you need to be guided by consistent termination practices to minimize your legal risks and to define the culture you are trying to create/maintain.
What Minimum Standards Apply to Voluntary and Involuntary Terminations
Voluntary Termination – when an employee resigns from or abandons his or her job.
The operating requirements for voluntary terminations are to:
- Request a minimum of two weeks notice – or according to company policy.
- Obtain a letter of resignation immediately upon notice.
- Conduct an exit discussion or interview.
Involuntary Termination – when an employee is discharged by their employer for cause or a layoff.
An involuntary termination for cause is a result of either a performance deficiency or of employee misconduct.
– Performance: Involuntary termination for performance is a result of the inability of an individual to meet your company’s performance requirements and expectations. Ideally, a performance improvement process precedes involuntary terminations.
– Misconduct: Involuntary termination for misconduct is a result of intentional bad behavior on the part of an employee including, but not limited to:
– Deliberately violating company policy or rules.
– Embezzlement, theft, or fraud in the workplace.
– Insubordination or willfully disobedient to manager/employer.
– Failing a drug or alcohol test – intoxicated or under the influence of illicit drugs if these are not related to a disability.
– Falsifying records.
The operating requirements for involuntary terminations for cause are to:
- Document that the employee has been advised of performance deficiencies or misconduct and given a reasonable amount of time to correct the deficiencies. Performance deficiencies should be addressed via a performance improvement process and misconduct via documented warnings.
- Document that the employee has failed to make the necessary corrections.
- Document thoroughly the employee’s actions that led to the termination decision.
Note: Extreme misconduct does not lend itself to warnings that allow time for correction.
Termination due to layoff occurs when a company lacks the financial resources to continue an employment relationship. It can also occur when the organization is undergoing reorganization that results in operating changes making one or more positions no longer appropriate to sustain within the company. Some specific examples include, but are not limited to:
– Business slow-down.
– Lack or loss of funding.
– Operating reorganizations.
– Business changes.
– Termination of a project or special employment.
– Elimination of a position. Note that the position must not be refilled within a period of six months or less (a general guideline).
The operating requirements for involuntary terminations due to layoffs are to:
1. Verify that employee’s selection has been fair and legal – and that it has been documented.
2. Ensure that all state or federal notice requirements that might apply have been reviewed by legal counsel.
Why It Is Important To Seek Legal Counsel
The costs associated with problems stemming from terminations that don’t happen smoothly are significant.
If you have any doubts about the process you are undertaking, seek legal counsel.
This content was developed for the PHCC Educational Foundation by TPO, Inc. (www.tpo-inc.com). Please consult your HR professional or attorney for further advice, as laws may differ in each state. Laws continue to evolve; the information presented is as of March, 2014. Any omission or inclusion of incorrect data is unintentional. Please note this article is not intended to provide legal advice or to substitute for supervisor employment law training.
The PHCC Educational Foundation, a partnership of contractors, manufacturers and wholesalers was founded in 1987 to serve the plumbing-heating-cooling industry by preparing contractors and their employees to meet the challenges of a constantly changing marketplace. If you found this article helpful, please consider supporting the Foundation by making a contribution at http://www.phccfoundation.org.
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