Five Considerations Before You Fire an Employee

Thinking of letting someone at your company go due to subpar performance? Firing employees is a fact of life for the average business owner (and sometimes downright necessary), but proceed with caution. Ending the employment relationship the wrong way can lead to big problems for your business. While there are often many considerations when you have to terminate an employee for poor performance, here are five key points to cover before you show an employee the door.

1. Have you set clear expectations for the employee?

As a preliminary consideration, take a step back and make sure you have set clear expectations and rules for your employees. One way to do this is by having a clear job description for each position. Employees should understand what is required of them in order to meet expectations. Written internal policies and procedures are another way of setting expectations by explaining organizational rules and chain of command.

By having your expectations clearly laid out for the employee, identifying when there are truly performance issues (as opposed to misunderstandings about expectations where coaching or better management can solve the issue) may become clearer. It also makes it more defensible when you have to terminate for poor performance to point to the job description and internal policies that were violated, for example.

2. Do you have a legitimate reason for the termination?

In Colorado, most employees are considered employed “at-will.” As we’ve discussed in a previous post, generally, this means an employer can fire an employee for any legal reason, or even for no reason at all. While an employer generally has this power, it is a good idea to justify a termination with a legitimate, non-discriminatory reason. Why? By having a legitimate reason for firing an employee—such as poor performance, or violation of company rules—it is less likely the organization will be at risk of liability for an employment discrimination lawsuit.

If an employee has a contract, it is even more important to have a legitimate reason for ending the contract prematurely. If you are in this scenario, you may need to obtain legal counsel before taking any action.

But even if you have leeway to fire an employee for any legal reason, it is best to be clear with the employee when doing so. Do not make it personal, but do not equivocate on the reason for the termination. Otherwise, the employee will be left to fill in the gaps, and this can potentially create issues down the road.

3. Have you followed your own internal procedure?

Another point to consider is whether firing the employee is in line with your organization’s own internal procedure. For example, some companies have progressive discipline systems where employees get a warning before termination for an offense. If you fire an employee before giving them a “second-chance,” it may make your legitimate reason for the termination appear suspect.

Along these same lines, proper documentation is key. When you are considering terminating an employee, it should generally not come as a surprise to that employee. Document any performance issues and discuss them with the employee ahead of time. Do not give glowing performance reviews when you really feel the employee is doing a subpar job. Having a clear paper trail leading up to the termination is best practice to help minimize risk and justify the separation.

4. Has the employee filed any complaints?

Consider whether the employee you are about to terminate has filed any internal grievances or external complaints about how he or she is being treated at the organization. If so, you may need to proceed with caution. Under state and federal employment discrimination laws, it is improper to terminate an employee as retaliation for filing a complaint of discrimination, for example. Even if retaliation is not your driving force, if the termination comes quickly after a complaint is filed, it tends to support the employee’s argument of retaliation.

This is not to say that once an employee files a complaint he or she is insulated from discipline or termination. However, in this scenario, it is all the more important to document the legitimate, non-discriminatory reasons for the termination to demonstrate the complaint did not trigger the adverse employment action. If you are in the position of having to fire an employee who has just complained about her supervisor’s improper sexual advances, for example, proceed with caution and seek counsel where appropriate.

5. Do you have a plan for the termination meeting?

Practically, have you considered how you will tell the employee about your decision? It is best to go into a termination meeting with a plan. Consider what you will tell the employee and how you will answer questions that are sure to arise. You may want to have another member of your team present, such as the employee’s direct supervisor or a representative from HR.

You should also have considered whether you will offer the employee a severance or separation agreement. Assuming you have not already promised severance upon separation from the company, a severance agreement is often a good way to help protect the organization from future lawsuits or disputes surrounding the employee’s termination. But severance agreements are generally not “DIY” exercises. There are many provisions that must be carefully drafted in order to comply with applicable law, so consulting legal counsel is typically advised.

Think Before You Terminate

Terminating an employee is never a fun exercise. But in certain cases, it is the best decision for the company. The considerations discussed above are by no means exhaustive, and every situation is different. But by proceeding in a thoughtful, intentional manner, you can help minimize risk to the organization, while also being fair to your employee.

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