In recent years, the buzz around a phenomenon known as the “Great Resignation” has been sweeping the globe, with employers across Europe and North America struggling to find candidates across a variety of industries.
For example, in Spain alone, vacancies increased by 150 percent in the transport sector, by 111 percent in public administration, and by 91 percent in professional and technical activities.
Similarly, voluntary resignations have seen an uptick, with employees’ redefining their priorities and fleeing jobs to seize new and unique opportunities, greater work-life balance, and less stress.
In the United States, the unprecedented jobs crisis brought about by the Covid-19 pandemic is showing no signs of slowing, with over 4 million Americans voluntarily leaving their jobs in the past 18 months, according to a Statista report published in January 2023.
These trends all have one common thread: employees are being choosier than ever when it comes to employment. Workers are no longer accepting low pay, strict or rigid working arrangements, or poor company culture simply for a paycheck. The COVID-19 pandemic enabled many people to reevaluate what was most important to them in life and work was at the forefront of this shift.
Today, it is more important than ever to ensure you protect your company’s reputation by handling all aspects of business legally and ethically. The way you recruit, hire, onboard, manage, and yes, even terminate employees, is essential in building a fair, equitable, and accessible workplace and hopefully, attracting top-tier candidates during a time when people are harder to come by.
As a leader, you have a seemingly endless list of responsibilities. From growing your company to managing your employees and ensuring projects stay on track and your teams are happy, there’s a lot of pressure that comes with the role. This pressure only mounts when employees are showing poor job performance, which may force you to make some tough decisions about the future of this individual at your organization.
Thinking about how to go about dismissing employees may not top your to-do list until it needs to be. And while it’s never fun, knowing how to terminate an employee properly is a reality for leaders and unfortunately, an inevitable aspect of business operations.
There are countless reasons you might find yourself in the position of terminating someone, whether due to the employee’s poor performance or a corporate restructuring, parting ways with a team member is often fraught with emotion and challenging for everyone involved.
Handling the termination process with care and professionalism is essential to avoid legal complications, damage to company morale, and potential negative impact on your company’s reputation.
We’ve outlined five key mistakes to avoid when terminating an employee and what you can do to avoid them and make an already difficult situation easier to navigate.
Lack of Preparation
One of the biggest mistakes you can make when terminating an employee is not adequately preparing for the conversation. Rushing into the termination without proper planning can lead to confusion, emotional reactions, and even potential legal issues.
Before initiating the termination process, take the time to gather all relevant information, such as performance reviews, documentation of any warnings or improvement plans, and any relevant company policies.
How to avoid this mistake
Create a well-structured plan for the termination process. Determine who will be present during the conversation, what will be discussed, and how the employee's exit will be managed. Consider the logistics of returning company property and disabling access to company systems. By being prepared, you can ensure a smoother and more respectful termination experience.
Insufficient Documentation
Proper documentation is crucial when it comes to employee termination. Without clear records of performance issues, policy violations, and corrective actions, you may find yourself in a difficult position if the terminated employee decides to challenge the decision legally. A lack of documentation can weaken your case and potentially lead to legal disputes.
If you want to avoid a wrongful termination lawsuit, make sure that you keep detailed documents on the employee's poor performance. While the US federal law does dictate at-will employment, meaning employers can fire anyone at any time, most countries don't allow for this. So, check in with your legal department to make sure you are treating employees in compliance with local regulations.
How to avoid this mistake
Maintain accurate and detailed records of the employee's performance, behavior, and any instances of company policy violations. Also, understand what constitutes a just cause for termination in your employee's jurisdiction. For example, falsifying company records may be a legal violation that merits termination while not respecting the dress code may simply go against company rules.
Keep records of performance reviews, feedback, and communication related to the employee's performance. When the need for termination arises, you'll have a solid foundation to support your decision.
Lack of Communication
Effective communication is key during the termination process. Failing to communicate clearly and empathetically can result in confusion, hurt feelings, and resentment among both the terminated employee and the remaining staff. Abrupt or insensitive communication can also damage the company's reputation and create negative word-of-mouth.
How to avoid this mistake
Approach the termination conversation with empathy and transparency. Choose a private location for the discussion and communicate the decision calmly and respectfully. Explain the reasons for the termination, addressing any questions the employee might have. Offer any necessary information about final pay, benefits, and the return of company property.
Consider providing resources for the employee to assist in their transition, such as information about job search support or counseling services.
Ignoring Legal Obligations
Terminating an employee requires adherence to various labor laws and employment standards, ultimately which will vary from country to country. To ensure that the process is fair and compliant you should seek legal counsel if you do not have the expertise in-house. Ignoring these obligations can lead to costly legal consequences for your company.
How to avoid this mistake
Familiarize yourself with employment laws and regulations in your area. It is critical that you base your termination decision on an action of the employee rather than basing it on discriminatory factors such as race, gender, age, or disability. What’s more, as an employer you must comply with notice periods and severance pay requirements as mandated by the law in whichever country you are operating within.
For remote global employers, you must abide by the local law where your terminated employee lives, which can vary greatly from the legislation and regulations where your company is headquartered.
In most cases, it’s a good idea to consult with legal counsel before going ahead and terminating the employee to ensure you are doing everything compliantly and to avoid any legal repercussions as a result of an accidental misstep.
Poorly Handled Termination Letter
The termination letter is a crucial document that outlines the reasons for the termination, final compensation details, and any remaining obligations. A poorly written termination letter can lead to misunderstandings, confusion, and even legal challenges.
Tips for Avoiding Termination Mistakes
Seek Legal Advice
If you are unsure about the legal requirements or complexities surrounding termination, consult with an employment lawyer to ensure compliance.
Maintain Confidentiality
Respect the employee's privacy and ensure confidentiality during the termination process to avoid potential legal complications.
Be Respectful and Compassionate
Terminations are often emotionally charged and difficult for employees. Conduct the termination meeting in a respectful and compassionate manner, providing clear explanations and answering any questions the employee may have.
Offer Transition Support
Consider offering support to the terminated employee, such as career counseling or outplacement services, to assist with their transition to new employment.
Other Things to Consider
Human Rights Legislation
Ensure that the termination process aligns with the local Employment Standards and Human Rights Act in whichever country your terminated employee resides to avoid discrimination claims. Treat all employees fairly and equitably during the termination process.
Constructive Dismissal
Constructive Dismissal happens when an employee has made a decision to resign from their employment because changes made or requested by their employer are not possible, or would result in a fundamental change to their employment.
As an employer, you must be cautious of actions that may be considered constructive dismissal, such as significant changes to the employee's role, compensation, or working conditions. A legal expert will be able to answer any questions you may have.
Paperwork
Keeping a record of your employment via contract will help you and your employee reference work expectations should any conflicts arise. When the unfortunate situation arises where you need to terminate an employee, a contract helps you keep a dated record of their employment time so you can calculate severance and other payment requirements.
What you owe your departing employee will depend on a variety of factors including:
- Length of employment
- Reason for dismissal
- Type of position (contractor, permanent, etc.)
- The country where your employee lives/where your business operates
Now that you know the top five mistakes to avoid when terminating an employee, how do you go about doing it in a way that’s empathetic and fair? We have outlined a couple of steps so you can navigate the actual conversation.
How to Have the Termination Conversation with Your Employee
Keep Lines of Communication Open
It shouldn’t come as a surprise to your employee that things are not working out. Ensure you are having conversations with the employee on things that are affecting the security of their employment like:
- Not performing up to standard
- Issues with colleagues
- Negative Behavioral patterns
Create an Improvement Plan
If this is possible, try and work with the employee to create an improvement plan so they have an opportunity to improve their skills. Sometimes, it comes down to people being unaware of their shortcomings and an improvement plan can provide the necessary structure they need to work toward goals and deliver better quality work.
It's helpful to outline the processes for performance improvement in your employee handbook so everyone is aware of the proceedings and repercussions.
Of course, this only works for specific cases, and for employees who have engaged in illegal or inappropriate activity or behavior the opportunity for an improvement plan will not be beneficial.
Prepare Documentation Together with Human Resources
If the employee fails to improve or you have determined that an improvement plan is not necessary, have your documentation ready. You will need to prepare a written notice of termination and review employment contracts to determine if a severance package will be required. You can do this by reviewing the termination clause in the employment contract you initially provided the employee upon their hiring.
You will also need to prepare a final paycheck to issue to your employee. Make sure to have a list of company materials and company equipment that the person needs to return. Plus, get any necessary information about ongoing projects to ensure continuity and prevent the dismissal from affecting other employees.
Conduct a Face-to-Face Termination Meeting
We’ve all heard the horror stories of mass layoffs with employees finding out they are jobless while on a Zoom call. If your employee is remote and located in a different country, video conferencing will be unavoidable, but ensure you do the termination one-on-one, with video on. Try and emulate that in-person environment so the situation feels less cold and impersonal.
End the Termination Process on a Positive Note
No matter what end of it you’re on, termination is awkward and emotional. Try to sever the relationship as positively as possible by being polite, understanding, and compassionate. You might consider sending a follow-up email with any relevant details (severance, benefits, vacation payouts, etc.) and a simple, nice note thanking them for their service.
Remember, this experience will remain a part of this former employee's employment history, and ensuring it is as positive as possible means they will have a better view of you as an organization.
It goes without saying that terminating an employee can be a daunting, challenging process with many legal repercussions and emotional burdens – for both you and the employee – if not done correctly and with care. This challenging aspect of managing teams, especially if they are remote and distributed all over the world, requires careful planning, empathy, and adherence to legal guidelines.
By preparing well in advance, documenting all of your contracts and notices, consulting legal counsel and ensuring you are handling the termination according to local labor law and regulations and you are drafting termination letters accurately and properly, you can avoid the five common mistakes employers make and make a difficult situation, a little easier for everyone involved.
Lastly, remember to approach each termination with sensitivity and professionalism. This is critical if you wish to maintain your company's reputation and protect the well-being of all parties involved.
Stay Informed & Compliant with Borderless
Managing local employment compliance, including hiring – and firing –employees can be challenging, particularly if you’re just beginning to expand into the market. Make it easier to navigate by checking out the Borderless blog for even more tips and tricks on all things global recruitment, retention, onboarding, and management.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
