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How to Fire an Employee

How to Fire an Employee

Termination, Part I
By James Stork
Senior Vice President, Drake Software
No one enjoys firing an employee.  Whether it is a seasonal worker or a permanent staff member, termination of employment is stressful for both the employee and the manager who must implement the decision.  
And it has to be done carefully.  While most professionals working in tax preparation and accounting firms are assumed to be employed “at will,” the courts have not always favored employers when it comes to the legal and emotional issues surrounding the termination of employment.  No termination should be taken lightly, even when it’s well deserved.  Regardless of how badly the employee has performed, and no matter how many times the employee has been disciplined, stay true to the process and make sure your actions are respectful, dignified, and legal.  A mismanaged termination can have a compounding effect on the health of your company.

Doing a termination well actually requires a few steps long before the final meeting – steps to be taken when you spot the first signs of poor performance, attitude, or disengagement.  Management must quickly hone in on the core problem and determine whether additional guidance or training can resolve the issue.  The firm, in making the ultimate decision to hire the employee, accepts a moral obligation to provide the employee with a path for improvement, and must protect itself by documenting that path with specific guidelines for righting the ship and re-evaluation.
At a minimum, it is important to have rules for employees, that those rules be uniformly enforced, and that employees certify that they have read and understand the rules.  This generally means the preparation of an employee handbook or list of policies, which in turn will require the assistance of a human resources management consultant and a good attorney.  
It is also important to have a procedure to follow in terminating an employee.  Having a procedure will take some of the stress out of the situation, giving the manager time to calm down, collect his or her thoughts, and make a more rational decision.  The procedure will also help in planning the termination meeting – while firing a temp may require less planning than firing a permanent or long-term employee, it still has to be done correctly.
This paper covers best practices for firing an employee.  It includes 10 tips and a “Termination Checklist” that will assist in the process. 
10 Tips for Firing an Employee 
1. Just do it.  There is a reason that you have decided to fire this employee, and if you have followed the correct procedures there is no reason to hesitate at the last minute.  It’s going to be awkward and unpleasant whether you do it today or next week, but putting it off can only make a bad situation even worse.  
2. Meet in person.  The annals of small business are chock full of horror stories from employees who were fired via email, or by a message left on their cell phones.  Such impersonal notices may save some stress for the manager, but they reflect badly on the firm.  Treating the employee this discourteously also angers them – which may lead them to take retribution such as suing the firm.  In the meeting, cut to the chase.  Don’t hem-haw around.  Let the news sink in, and then cover the details – when they will receive their last paycheck, how they should exit the building, what they should leave behind, etc.  
3. Be respectful, humane, and brief.  In as few words as possible, tell them you have to let them go and why.  Beyond this, re-hashing grievances or failures of the past will accomplish nothing.   Above all, don’t allow yourself to get sucked in to an argument.  If the former employee wants to debate, attempt to end it by saying, “I understand you probably don’t agree with my assessment or decision.  But I’ve made my decision and it’s final.  It’s time for you to go.”
4. Let them know what to expect in the future.  Firing the employee does not mean the relationship will come to an end.  If that person is in your profession, chances are good that you will see them again at conferences and meetings.  Whether they speak highly of your firm or not depends a lot on how you handle the post-employment details.  Unless they have been fired for an illegal act, the employee will be entitled to unemployment, so let him or her know up front that they should file and that the firm will not oppose it.  Let them know that you will only provide future employers with basic employment information, such as your dates of service, job titles, and responsibilities.  Let them know when they will receive their last paycheck and what deductions will be made.  Let them know the status of any retirement accounts.  End the meeting on a positive note and wish the former employee good luck in their next job.
5. Don’t assume the employee will be surprised.  It is sometimes the case that the employee is shocked by the decision to fire them, but in my experience, most are prepared for the worst.  In roughly half of all firings, the employee is aware that their performance does not match the firm’s expectations – particularly if you have done a good job at trying to give the employee a path to improvement and have documented your coaching sessions aimed at improvements.  Do not be surprised if the employee is already job hunting.  Being fired is a part of every business career and often leads the employee to take the actions that will lead to a better career path.
6. Have a witness in the meeting.  If the termination goes to court, you need to avoid the “he said/she said” disagreements over what happened in the termination meeting.  Having another person in the meeting can keep things calmer and dilutes any incentive for the employee to retaliate after the fact.  Most firms have a senior partner manage the termination meeting with the HR staffer or office manager as the second person.
7. Recover the company’s property and allow the employee to have theirs.  This usually means that the termination meeting should be done over the lunch break or at the end of the day.  It also allows the employee to leave with some dignity, without the embarrassment of having to be escorted out in the presence of former co-workers.  Before the employee exits, recover all company property – including keys, badges, laptop computers, cellular phones, and keys to company vehicles.  At the same time, provide a container for the employee to use in removing their personal property as easily as possible.  If the former employee is too upset to do this on the day of termination, make arrangements for them to come in at another time to do so – under escort, and not during work hours.
8. Remove the employee from the accounting and IT systems.  Cut off access to the company computers, to work areas, and from the payroll system.  Minimize interaction with customers and other employees.  Once the termination meeting has taken place, the employee must have no access to email, customer lists, or other company systems.  If the employee wishes to say good-bye to co-workers, he or she should use a personal email account.  Most of the damage done to companies by former employees occurs because they still have access to company networks and email systems.
9. Review the firm’s non-compete provisions.  Most firms have their professionals sign a non-compete clause, though these have been successfully challenged by court rulings on the matter.  Review the provisions and restrictions under the non-compete so that the former employee understands the limitations and obligations it contains.  Even if the employee has not signed a formal non-compete agreement, the firm’s employee handbook should contain language strictly forbidding employees from sharing confidential or proprietary information about the firm to competitors, prospects, or clients.  Make sure these obligations are covered as well.
10. Use a Termination Checklist.  A checklist will help to keep the process organized, and will ensure all appropriate items are covered.  A sample checklist is enclosed in the next section of this paper.
The Termination Checklist
Firing an employee is more than just a single unpleasant meeting.  Long before the event itself, there are requirements for remedial efforts; planning for the event; items that must be covered during the event itself; and post-firing activities.  
The Termination Checklist must then cover four different and specific areas.  Here’s a sample checklist:
1. Remedial efforts.
a. Employee handbook and policies have been explained to the employee and employee has signed a document indicating they understand the policies.
b. Job description and performance have been explained to the employee and employee has signed a document indicating they understand the job duties and expectations.
c. Employee has been given an opportunity to explain their performance/behavior and any extenuating circumstances.
d. A remediation plan was created and approved by both the employee and management.
e. Performance reviews have been conducted at intervals sufficient for the employee to demonstrate improvements.  These reviews have been documented and the employee has signed to indicate they understand the review, the expectations going forward, and the criteria that will be used to judge future performance.
f. All remedial and disciplinary actions have been documented. 
2. Termination Planning.
a. Coordinate with designated Personnel Manager, including the final work date, preparation of a final paycheck, details of retirement and other benefits, and removal of the employee from the HR system.
b. Coordinate with Security, if deemed necessary, for escort from the building and retrieval of company property, keys, access cards, and other items.
c. Coordinate with IT, including the final work date and time for termination of access to all computer, phone, and other systems.  This should coincide with the beginning of the termination meeting.
d. Preparation of a termination letter that notifies the employee of their termination and covers details of final paycheck, retirement, benefits, and a formal request for return of all company property.  This letter should also include non-compete information.
e. Planning for the date and time of termination.
f. Meeting time and date set to minimize impact to the employee and firm.
g. Identification of a witness to the termination.
3. The Termination Meeting.
a. Finalize termination letter, as approved by legal and HR, and present to employee.
b. Discuss effective date, business reasons for termination, and unemployment eligibility.
c. Review confidentiality/proprietary information policies.
d. Confirm employee’s address and contact information for future notifications.
e. List of company property to be returned finalized, including:
1.   Cell phone/calling cards
              2.   Tablet/laptop/home computer/scanner/fax machine
              3.   Company phone list/client list/employee handbook
              4.   Identification badge/office keys/key cards
              5.   Company car/credit cards/parking pass.
f. Review of personal information on company computer.
g. Review procedure to be used to quickly facilitate return of Company property and retrieval of employee’s personal property with dignity.
h. Establish details of wages owed, including sick pay, vacation pay, stock options, severance pay, bonuses, and deductions if any.
i. Establish details of health insurance continuation, if any
               1.  Coordinate preparation of COBRA notice
               2.  Confirm termination date for health care coverage.
4. Post Termination.
a. Cancel employee access to computer systems, including:
                1.   Change of passwords for system to prevent unauthorized access
                2.   Archiving of all emails for legal/records retention purposes
                3.   Automatic email notification that employee is no longer employed
                4.   Notification of key clients as necessary
                5.   Remove employee from the firm’s web site and marketing materials.
b. Review company information on home/personal computer that needs to be deleted/returned, and set procedure for doing so.
c. Place other documentation related to employee in the employee file, including a copy of the termination letter, and archive.
d. Delete employee from accounting/payroll systems.

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