The time to terminate

As an employer, you have the right to terminate employees at will or for cause, but you first need to take the proper steps to ensure that doing so doesn’t result in a lawsuit.

Whether you’re terminating because of poor performance, eliminating a position or laying off because business is slow, there are things you first need to think about to protect yourself, says Diane Crandall, director of compliance consulting services with ManagEase Inc.

“When exercising your at-will rights as an employer, make your decisions based on employees’ knowledge, skills, ability and attitude,” says Crandall. “And when terminating for cause, have a performance improvement plan in place that includes, in writing, what’s wrong, what needs to occur, a timeline and the results of not meeting the goals.”

Smart Business spoke with Crandall about how to keep your organization protected when terminating employees.

What steps does an employer need to take before terminating someone for substandard performance?

First, it is essential that you communicate with employees. You have to identify to the employee what he or she is or is not doing that is affecting optimal job performance. Without that communication, the employee may think that he or she is doing a fine job, while the employer is thinking, ‘Why isn’t that person getting these sales invoices processed?’

Communicate what the shortfalls are and that those areas need to be significantly improved on in order to retain the position. Give the employee a step-by-step, detailed list — a performance improvement plan — that sets forth exactly what that person needs to do. You also need to provide a timeline of when you expect to see results.

Finally, you need to make it clear what the result will be if the objectives are not met. Then have both the employer and employee sign it and give a copy to the employee so he or she knows exactly what is expected.

How important is explicit communication with the employee?

That communication is vital. It should never be a surprise to someone who is terminated because of performance. Employees should always know what is going on, what is expected of them and whether they are meeting expectations. Not doing so can result in a lawsuit if the terminated employee thought he or she was doing well and no one ever said otherwise. And having a performance improvement plan can make a difference in claims for unemployment insurance when the Employee Development Department calls to ask if you ever gave the terminated employee an opportunity to improve.

When is the best time to address problem behaviors?

It’s best to address them right away. If you don’t ever address it, and then three years later you do, the employee is going to wonder why it matters now when it never mattered before.

Addressing problems immediately can be positive for morale, as well. As an employee, it’s difficult to work in an environment when you’re there on time, doing your job, producing, and someone else who is always late and is only producing at 50 percent is treated the same as everyone else. If you eliminate those nonperformers, it can be a real boost to other employees.