What You Should Know about Employee Termination


Ask any manager about the worst part of their job and they will likely say terminating an employee sits at the top of the list. Regardless of the employee’s performance, personality, or other circumstances, termination is difficult. It is a task filled, not just with emotion, but also the risk of legal backlash. Here’s what you should know to terminate an employee the right way.

Always Hire with a Contract

From a legal standpoint, you can feel much more confident terminating an employee if you have an employment contract and job description in place from the beginning. Before taking action, review the contract to verify that nothing in the document limits your ability to terminate the employee.

Did you guarantee employment for a certain period? Are there certain performance metrics that cannot be considered?

What About Documentation?

Prior to termination, did you document the issues? Did you speak to the employee in an official capacity about the need to improve? Did you develop a plan for improvement along with a metric that would measure how well they responded?

Each of these are reasonable actions to take prior to termination. Although they are not a requirement, they strengthen your case should the ex-employee accuse you of wrongful termination. Remember that if the employee takes you to court, you have to meet very high standards to prove that you had just cause for termination. That’s why documentation is important.

If you took these actions, create documentation to place in their personnel file. (If you don’t keep personnel files, start today.)

How to Terminate an Employee

Because the act of termination is emotionally charged by nature, develop a plan that ensures the termination process is legal, documented, and protects your company records, as well as other employees.

1) Have a second person in the room to take notes. Depending on local law, you may be able to record the conversation without the employee’s consent.

2) Provide an official reason. The reason should include violations of company policy or job description or actions that are illegal under other applicable laws. Terminating an employee because they didn’t have an outgoing personality, for example, is probably legal but difficult to prove.

3) State past counseling. If you spoke to the employee about issues in the past, remind them of those conversations.

4) Ask for the return of company property. If the employee has company equipment at home, documents, or has control of social media accounts or webpages, ask for the return of the property and the transfer of digital accounts to you. Tell them that you will have their final check ready as soon as all property is returned.

5) Stress that company information is confidential. If you have that in your employee contract, remind them that they signed a confidentiality agreement.

6) Don’t argue. If the employee wants to argue, listen but do not engage. Saying something while in a defensive mode could open you up to legal liability. Don’t call them names like, “incompetent” or “thief” as that may allow for a defamation suit.


Use termination as a reason to review your employee handbook, contract, and job descriptions. Is something missing that should be added?

Also, if you’re later called for a recommendation and don’t feel comfortable being positive, verify the past employee’s position and dates of service. In general, refrain from speaking negatively to avoid defamation lawsuits.


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