Small Business: Have a clear termination policy for employees

Having a solid termination policy in place and Having a solid termination policy in place and following a few careful steps could help stave off potential problems when it comes to firing employees, experts advise small businesses. Photo Credit: iStock

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Jamie Herzlich Newsday columnist Jamie Herzlich

Herzlich writes the Small Business column in Newsday.

Firing an employee is often a manager's most dreaded task.

It's not only uncomfortable, but if not handled right it could lead to more than just hard feelings if an employee decides to take legal action.

Having a solid termination policy in place and following a few careful steps could help stave off potential problems.

"Too often it happens that you fire someone and they're shocked that you fired them," says Steven Shaer, president of Shaer Associates, a Miami-based management consultancy and author of "Fix Them or Fire Them" (Challenger Books; $14.99). "Yet everybody around this person knows it's long overdue."

Often, it comes as a surprise because the manager hasn't adequately communicated performance problems, Shaer says.

"Most people are overly sensitive to the feelings of the employee and they tend to communicate in sugarcoated terms," he explains. Employees need to know early on how you view their performance, and what the consequences are if they don't improve, says Shaer.

If there's a problem, be direct and specific, he says. Show third-party evidence when possible (ie.: their error rate or a metric showing their performance against that of their peers').

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Set a time frame for the person to improve, says Shaer, noting 90 days is generally adequate.

In cases of termination, employers often act too quickly or too slowly, explains Keith Gutstein, a partner at the law firm of Kaufman Dolowich Voluck LLP in Woodbury.

By acting too quickly, the employer often fails to document the employee's shortcomings and performance problems, says Gutstein. Without documented proof, the employee can create reasons for his or her termination and can argue that it was somehow based upon unlawful discriminatory rationale, he notes.

Conversely, it could be problematic if an employer acts too slowly and waits too long to address an employee's poor performance. Then, if the employee is injured or becomes disabled, the employee may claim he or she was only terminated because of the disability or injury, says Gutstein.

Employee handbooks should set out clear expectations for what's required from workers, including their performance, notes Barry Levy, a partner in the labor and employment and litigation practice groups at Rivkin Radler LLP in Uniondale.

Companies should have complaint procedures in place to create a forum for employees to address issues concerning workplace discrimination and harassment, he notes. This enables employers to address a complaint internally in an effort to avoid litigation, and also "imposes a legal requirement that the employee utilize the internal complaint procedure before seeking relief through an administrative agency or court," he says.

Having an established procedure to address employee performance, whether in the form of warnings or memos, is important to notify employees of inadequate performance and to document issues if discipline is ultimately warranted, says Levy. Just keep in mind, "whatever procedure a company puts in place, it has to treat everyone the same," he notes.

After terminating an employee, let them grab their things and tell them to leave the premises immediately, says Brian Wallace of NowSourcing Inc., a Louisville, Kentucky-based infographics firm. NowSourcing recently produced a step-by-step infographic on the subject for its client TopManagementDegrees.com (see it at bit.ly/1jIh2P7). "Letting people linger can be toxic," he says.

You may even ask the employee to sign a release of liability. Consider offering some type of severance in exchange for signing it, says Gutstein. "It may be the best way to buy closure," he notes.

Common Mistakes

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Inadequate documentation prior to termination

Poor communication

Being dishonest about reasons for termination

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Being inconsistent on how you handle terminations

Not having a witness present when you terminate an employee

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