How to Legally Terminate an Employee with Grace

Most HR professionals agree that firing someone is the worst part of the job. But employee terminations are a natural part of the employment process, and eventually, you’ll find yourself in a situation where it’s time to sever an employment relationship.

Terminations are unique and often difficult situations that require care and respect. Preparation is crucial in handling the termination process from start to finish gracefully.

Types of terminations

You may want to let an employee go for many reasons, and you should tailor your approach accordingly. For example, employee misconduct requires a different approach than a company downsizing. Here are some other grounds for termination:

Poor performance: The employee failed to meet the expectations or requirements of their job. Poor performance could include:

• Failing to meet deadlines
• Not producing high-quality work
• Not meeting sales or productivity targets

Misconduct: The employee conducted unethical or inappropriate behavior, such as theft, sexual harassment, or discrimination.

Violation of company policies: The employee did not follow the company rules or guidelines. This violation could include failing to follow safety procedures presented in an employee handbook, not following dress code policies, or engaging in activities not permitted by the company.

Downsizing or restructuring: Company management decides to reduce the number of workers or reorganize the company. This decision could be to reduce spending, leave a market, or shift priorities.

Note that there may be specific legal definitions for these terms depending on the employment regulations in your country, which affect the actions you can take.

How to prepare to terminate an employee for performance reasons

If you are considering terminating an employee for performance reasons, it’s essential to be prepared and to follow a fair and consistent process. 

Layoffs should be a last resort. They are expensive for businesses (especially given the cost of hiring a new employee and can be emotionally and financially catastrophic for the terminated worker. Before you consider firing an employee for performance-related concerns, work with them in good faith to improve the relationship.

Bring up your concerns with the employee early in a performance evaluation

During a performance review, take steps to raise performance concerns as soon as possible. Allow the employee to address any issues and improve their performance before it becomes a more severe problem. 

Be specific about what you have observed and how their performance falls short of expectations. It may be helpful to provide examples and to offer guidance or support on how the employee can improve.

Ask about blockers in and outside of work

Ask the employee if any factors are blocking them from meeting their job expectations, both in and outside of work. Scenarios may include personal challenges, such as family responsibilities or health issues, or challenges related to their work environments, such as a lack of resources or support.

It’s equally important to clarify expectations as it is to understand why an employee has met those expectations. Once both parties arrive on the same page about expectations, you can work to find a suitable solution.

For instance, if lateness is the issue, clarify that your office expects punctuality. But saying “don’t be late” isn’t enough: ask the employee why they run late and what the office can do to find a solution. It might help to adjust the employee’s schedule or subsidize a public transit pass to help them get to work on time.

Document performance issues

A written record provides an objective view of the employee’s performance in their tenure and can be used to defend your termination decision if necessary.

Document any conversations or meetings with the employee about their performance, including any feedback or coaching provided, and save it in their personnel file. 

There are some best practices to follow when documenting job performance:

• Define measurable and realistic expectations
• Standardize all performance issue records for each employee
• Use specific and objective language to describe the employee’s performance issues
• Provide examples of the employee’s behavior or work that has been unsatisfactory
• Allow the employee to review and acknowledge performance discussions, if suitable
• Keep your documentation organized and easily accessible
• Follow any relevant laws or company policies regarding documentation

Develop a performance improvement plan (PIP) to address the issue

A performance improvement plan (PIP) is a proactive action plan co-developed by management and an employee to address performance issues and help an employee improve their work. PIPs are suitable if you can address the employee’s performance issues through additional support and guidance.

It’s essential to be open and transparent with the employee about the process and involve them in developing the PIP. Your HR department can guide how to develop a performance improvement plan that fits your company’s goals and policies, but the overall objective is to identify resources that can help the employee succeed and improve:

• Identify specific performance issues: Review work, collect feedback from supervisors or colleagues, or discuss issues with the employee directly to identify specific examples of the behavior or work that has been unsatisfactory
• Identify skill or training gaps: Determine whether the employee may have any skill or training gaps that contributed to the issues
• Set clear goals: Set specific and measurable goals for how the employee can improve their performance, taking into account any skill or training gaps
• Outline a plan: Determine how to provide additional training. Involve the employee in the development of the plan and ensure that it’s realistic and achievable
• Review and evaluate progress: A PIP should last long enough to allow an employee time to improve. Set specific benchmarks and deadlines for progress and provide feedback and support to help them achieve the goals of the PIP. It’s essential to be objective and fair when evaluating progress. If the employee has not made sufficient progress, adjusting the plan or considering other options, such as additional training or termination, may be necessary.

How to prepare to terminate an employee for misconduct or policy violation reasons

Termination for misconduct or violation of company policy requires clear and thorough documentation to serve as evidence. This evidence can include witness statements, video or audio recordings, emails, or other relevant documentation. 

Review the company’s policies and procedures to ensure that the termination follows the procedure. Consult with HR professionals or legal counsel to ensure you follow all relevant laws and regulations during the process. You may need to consider the potential impact of the termination on the employee’s career, as well as any potential legal implications that may arise.

How to prepare to terminate an employee for downsizing or restructuring reasons

Letting employees go for non-performance reasons can take time and effort. To prepare, create a clear policy that outlines the criteria for downsizing and the process to follow. This step ensures that the company makes fair decisions in the best interests of the company. 

You may be required to notify workers in advance of a pending layoff. In these situations, it’s essential to be transparent and honest about the reasons for the termination. How you present the news can significantly impact the employee and the overall perception of the company. Consider offering outplacement support or a severance package to help them transition to a new job.

Understand your location’s applicable termination laws

It’s essential to follow the laws of the country where you are firing employees. Employment laws can differ between countries, and failure to follow local laws can result in penalties and harm your company’s reputation. Working with a local expert is essential to avoid a wrongful termination lawsuit.

For example, in Brazil, employment law is part of the constitution, and workers are often familiar with their employment rights and entitlements. In the EU, employers and employees must notify each other in advance and establish a notice period before terminating an employment relationship.

An international employer of record (EOR) can provide valuable support and guidance in understanding international termination laws.

Deel is the largest EOR provider globally, with over 35,000 active customers under our 150 entities. Our in-house employment experts have local knowledge of the legal requirements for notifying an employee of termination. They can help employers navigate cultural considerations and communicate respectfully and professionally.

At-will employment is not the norm

In the US, most employment is at-will. That means employers can typically terminate an employee without providing cause or notice. However, at-will termination is rare elsewhere in the world. 

In Canada, for example, you must provide advance notice or additional pay instead of the notice. The required notice period generally increases the longer the employee has worked at the company.

You cannot terminate someone within a protected class 

A protected class is a group of people with specific characteristics or traits protected by law, such as race, religion, age, gender, sexual orientation, national origin, and disability. Employers are not allowed to terminate an employee based on any of these protected characteristics.

In the US, an employer cannot fire workers for reporting a workplace violation or refusing to take a lie detector test.

Setting and holding the termination meeting

Termination meetings should take place in person or via face-to-face video calls for remote teams, and follow these steps:

Step 1: Prepare documentation: Collect supporting records and prepare a notice of termination. The termination letter should include the employee’s last day, an explanation of any additional continued benefits or severance pay, and their final paycheck details

Step 2: Bring a witness from HR: The HR witness can provide guidance on the termination process and ensure the meeting is conducted professionally and follows company policies and procedures

Step 3: Follow a short, professional termination script: Focus on explaining the reasons for the termination and the steps that led to the decision. Allow the employee to ask questions, but keep the conversation from snowballing into a long discussion. You must be clear that the decision is made and not negotiable. Avoid phrases such as “We are sorry” or “I feel bad.” This language may weaken your decision and raise questions about whether you made enough effort to resolve the issue leading to termination. Such phrases can frustrate an employee

You could structure an employee termination script like this:

After termination: pay and benefits

The termination meeting should also explain the benefits the terminated employee will receive.

Final paycheck

The final paycheck should include unpaid wages, overtime, or other compensation. There may be laws on when you must provide this paycheck. For example, some US state laws require you to provide the final check immediately upon termination. In other states, you can wait until the next scheduled pay cycle.

Severance pay

Severance pay is typically a lump sum payment that helps employees transition to a new job or cover expenses while searching for new employment. The employer and employee may negotiate the amount of severance pay, or it may be set by the employment contract or collective bargaining agreement.

The Fair Labor Standards Act states that a severance package is optional in the US. In other countries, employees may be entitled to a certain number of weeks of severance pay based on their length of service.

Severance package

Aside from a lump-sum cash payment, a severance package may also include continued health insurance, the services of an outplacement program such as career coaching, visa or migration support, and accelerated stock options vesting.

Country-specific benefits

You may be required to provide specific benefits by law. For example, in the US, the Consolidated Omnibus Budget Reconciliation Act (COBRA) allows terminated workers and their families to continue using their healthcare coverage for a certain period.

Other countries may mandate paying out unused vacation time or accrued annual leave.

Unemployment benefits

In some countries, terminated employees may be eligible for unemployment benefits. The company may be required to submit the necessary documentation to the employee or the government to help them apply for these benefits.

Transitioning the employee out of the business

Close out the employee’s role after their departure with these remaining housekeeping steps:

Remove them from company tools and accounts

As part of standard offboarding procedures, remove the employee from any company tools or accounts. Collect company property, such as computer equipment, access pass, or tools.

Announce the departure to the rest of the team

The rest of the team may notice if a colleague is no longer present, so it may be necessary to announce the employee’s departure to the rest of the team. Knowing a coworker has lost their job can cause concerns even when other employees keep their job.

Be respectful and professional when making this announcement, and avoid discussing sensitive or confidential information. Be prepared to address any questions or concerns.

Hire a replacement

If the terminated employee’s role is important to business operations, it may be necessary to hire a replacement. You may wish to take the opportunity to restructure the new role—having a clear idea of the skills and responsibilities required will help you find a suitable new hire.

Are you interested in hiring an international employee? Discover how easy the hiring process can be.

Deel simplifies hiring–and firing–employees around the world

Terminating an employee can be a nightmare for human resources and the entire organization. Fortunately, Deel’s legal team manages the complex legal process of terminations case-by-case on your behalf. We’ve handled +5000 terminations compliantly, so you can rest assured knowing that every termination is handled gracefully and respectfully wherever your employees reside.

Book a demo today to learn more.