Legal

How to terminate an employee for performance

Employee termination tips from Oyster's legal experts.
January 26, 2022
Maryann Walters
How to terminate an employee for performance

Wherever you may work, the process of letting someone go due to performance issues is almost always the hardest part of the job. Many find it difficult to manage the process leading up to termination appropriately, as well as the actual termination itself and the period following termination. Here are some tips from employment experts that can make this challenging process less stressful for all parties involved.

Deciding to terminate for performance

Terminating for performance is not a desirable outcome for either the company or the employee. Many managers struggle mightily between the time they first observe their employee not meeting expectations and the decision to terminate. In addition, managers need to be extremely careful throughout the process to ensure that they comply with accepted termination practices. This is both in the interest of being a good corporate citizen and avoiding legal action associated with unfair or wrongful dismissal proceedings.

Employee termination laws are complex and vary significantly based on the country and jurisdiction in which the employee is located. It is important to remember that what is considered reasonable grounds for termination in one country may easily be considered unlawful in another. Therefore, a decision to terminate an employee due to performance issues should never be made lightly, and always in conjunction with consulting General Counsel.

Reasons for termination for performance

In the United States and many other jurisdictions, termination with cause and termination without cause are the two basic types of involuntary termination in a workplace. Termination for performance can be considered termination with cause if the employee exhibits serious misconduct, such as policy or ethics code violation, providing false information on a job application, or delivering egregiously poor performance. In the absence of these reasons, termination for sub-par performance is generally regarded as termination without cause. 

As termination without cause is challenged more frequently through legislation designed to protect employee rights, it is critical for managers in this situation to maintain all performance and evaluation records throughout the termination process in order to clearly demonstrate valid concerns in the event of a wrongful or unfair termination lawsuit. This process typically begins with issuing formal warnings to the employee and the subsequent initiation of a performance improvement or informal probationary period to address the documented concerns.

Managing an employee through the Performance Improvement Process

Good managers know the secret to good management is open and honest communication. Managing an employee through a Performance Improvement Process is no exception. Frustration and pain for both manager and employee alike can be averted by following these three basic guidelines:

1. Don’t delay the inevitable 

Don’t look for excuses to avoid a hard conversation. Delaying the initiation of a Performance Improvement Plan or putting off giving the employee a formal warning in the hopes that things will self-resolve on their own is both a waste of your time and your employees’ time. Hard conversations do not get easier when you put them off, and in the case of termination proceedings, may even make the situation worse, as you are now in the position of giving your employee mixed messages.

If you are a manager finding you are avoiding the conversation because you dislike confrontation, you may find it useful to ask yourself if you are really helping someone by not giving them the feedback they need to improve.

2. Use data

Use a data-driven approach to manage performance improvement, giving discrete assignments with clear, unambiguous direction and on-going, documented feedback. 

Often, team members and managers will avoid assigning work to the employee in question, or, in extreme cases, devise processes to work around them because they don’t trust them enough to do a good job. Sometimes people even do the work themselves. These passive-aggressive strategies result in the employee in question doing nothing, making it virtually impossible for a manager to hold them accountable to do the job they were hired to do, or for the employee to have a fair chance of improving their performance.

3. Involve the employee

Allow the employee to be as engaged as possible in crafting their own Performance Improvement Plan. This enables them to take responsibility for their performance improvement and makes it very clear if they are taking the opportunity to improve their performance seriously or not.

Announcing termination

Informing the employee

If the employee is unable or unwilling to demonstrate improvement during the Performance Improvement Period, the employer should not delay in moving forward with the employee termination proceedings as quickly as possible. Conventional wisdom agrees on several key points when it comes to informing the employee about their pending termination.

1. Coordinate with your Human Resources department

You need to agree upon the conditions of termination with the HR department ahead of time, including key dates.

2. Schedule a generic meeting for the employee's direct manager to deliver the announcement to the employee

Managers may want to include HR and their own manager to participate in the discussion, but the employee’s direct manager is typically expected to do most of the talking. If termination proceedings are managed correctly up to this point, the employee should not be surprised by the announcement. This termination meeting should not take longer than 15 minutes.

3. Have the termination letter ready 

The termination letter should already be written and signed to provide to the employee immediately following the meeting. Most companies have Human Resource Business Professionals and Legal Counsel available to write or assist with writing the formal termination letter to ensure it complies with relevant employment laws, regulations, any applicable Collective Bargaining Agreements (CBA), and customs.

4. Ensure the termination letter includes all details about what happens next

Include descriptions of the employees’ last day, last paycheck details, how unused holiday pay will be handled, how to return their equipment, their options regarding benefits, severance package details, and anything else that they need to know, such as their rights under employment law or applicable CBAs.

5. Keep your message in the meeting as short and to the point as possible 

Don’t muffle the impact of your words by back-pedaling, apologizing, talking about how hard this is for you, blaming others, or talking about unrelated topics. Your words need to be as clear and concise as possible in order to ensure there is no chance of confusion on behalf of the employee as to the fact that they are being let go. 

Frequently managers write scripts ahead of time to ensure they do not stray from the key message. Avoid bringing up any details during this conversation that have not already been extensively covered during the Performance Improvement Period.

6. Show compassion and respect

While you should be as direct as possible, that does not mean you cannot express sympathy and compassion. You can do this by adopting an empathetic expression and tone of voice, and giving the employee your full and undivided attention during the meeting session, which should always be in-person or via live video teleconferencing.

Informing the company

The announcement to the company should be sent out immediately following the meeting with the terminated employee. It is critical that this step is taken in order to reduce opportunities for gossip, loss of trust, or employees fearing for their own jobs. Many of the same conventions that apply to informing the employee of his or her termination apply to this announcement as well.

Keep the announcement as short and to the point as possible, and remember:

  • Don’t send it to people who didn’t have any reason to interact with the employee. This causes unnecessary confusion and angst.
  • Just the facts - don’t include the reason for termination or any details regarding why the employee is no longer working for the company. Always protect the privacy and dignity of the employee.
  • Include the date of the employee’s last day
  • Include any details others in the company may need to know about who will be taking over the terminated employees’ responsibilities and if management is seeking a replacement.

Some experts advise limiting this communication to no more than three lines of text.

Informing others outside the company

In some cases, the terminated employee is a prominent figure within the company, and an announcement of the termination must be made publicly in a press release or statement shared with external parties, such as clients, shareholders or strategic partners.

The Marketing and Legal departments should be involved with these communications to ensure that news of the employee termination does not depress faith in the company, its leadership, reputation, or market position. While some temporary losses may be unavoidable, experts advise that being as honest as possible while still protecting the employee’s privacy and dignity is paramount in retaining stakeholder trust. Here are some tips to ensure this announcement has the desired effect:

  1. Direct the announcement appropriately. Sharing this information with stakeholders who don’t know the employee and never interact with the employee is distracting and unnecessary.
  2. Just the facts. Do not include overly flowery language or any language that distracts from the main point, which is that the employee no longer works for the company.
  3. Include the employee’s departure date.
  4. Do not include details regarding the employee’s departure if it was an involuntary termination.
  5. Discuss next steps and any relevant transition plan details.
  6. Assure stakeholders why this transition will not have any material impact on the company’s future by emphasizing your company’s long-term vision, mission and strategic viability.

You should be able to find many publicly available examples of these press releases. They typically emphasize point number 6, such as in the example below:

“There is no question that Wile E Coyote will be missed, however we have full faith in our ability to innovate and continue to grow market share using the same strategies and shared values that has made the Acme Corporation an industry leader for over 150 years.  We are unwavering in our commitment to our customers and are confident in Acme corporation’s long-term future offering affordable financial services to desert-dwelling Americans in addition to high-quality anvils and dynamite supplies.”

Hopefully, this article has been useful in providing you with some insight into how to appropriately handle employee terminations for performance, including factors to consider when making the decision, how to handle the process up to and including employee termination, and how to appropriately announce employee terminations for performance. 

Stay tuned for more articles with useful tips on managing employee terminations for cause, important employee termination legislation, and how to manage issues that may arise after employment termination.

Find out more about legal issues and that you might run into over the course of running a global company on the Oyster blog.

Disclaimer: This blog and all information in it is provided for general informational purposes only. It does not, and is not intended to, constitute legal or tax advice. You should consult with a qualified legal or tax professional for advice regarding any legal or tax matter and prior to acting (or refraining from acting) on the basis of any information provided on this website.

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