March 1, 2003

4 Min Read
Employee Termination

Firing an employee is one of the hardest tasks you face as a business owner or manager. if you've ever had to terminate someone, you already know this. if you haven't done so yet, you may find out some day.

Looking a person in the eye and telling him he no longer has a job is difficult enough. The possible fallout is a worry, too. Will the fired employee turn around and sue you? Will he steal from you, sabotage your company or act violently? Fortunately, if you plan ahead, you may be able to strip away some of the discomfort of the situation. But more important, you can reduce the risk of being sued or having the employee harm your business in other ways.

For excellent advice on how to conduct a firing, I recommend, Dealing With Problem Employees by Amy DelPo and Lisa Guerin, a pair of employment-law specialists based in California. What follows is the essence of their advice.

Consider Using a Two-Step Process

You can start with the actual termination meeting. Then, follow up with an optional exit interview several days later. By that time, the ex-worker's emotions may have cooled. You can have a calm discussion of details, such as when the employee's health- insurance coverage will end.

Decide Who Should Break the Bad News

Pick someone who has had a positive--or at least a neutral--relationship with the employee. It's unwise to give this assignment to someone who's been at odds with the employee or is emotionally involved in the firing decision. Also, choose someone who has discretion and doesn't gossip.

You Can Probably Do Without a Witness

It's often recommended two people attend the termination meeting for the employee. The idea is one does the firing and the other is the witness in case there's a lawsuit. But having a witness may humiliate the employee; the firing may be more public than private. Use common sense. On balance, it's probably best to bring in the second person only if you think there's a high risk of litigation or violence, but not in other situations.

Meet Where the Employee Will Feel Most Comfortable

Making the employee feel comfortable can help head off a wrongful-termination lawsuit. Of course, that notion may take a back seat if you fear violence, theft or sabotage. In most cases, however, employee comfort is a priority. Choose a quiet place where there's privacy. The employee's own office may be a good choice. In most situations, avoid escorting the employee out the door. Doing so may make the employee feel he is being treated like a criminal.

Choose Your Words Carefully

Tell the employee the date the termination will take effect--maybe it's immediate. Give your reasons objectively and concisely. Don't be drawn into a debate. Have the employee's final paycheck at the meeting. If that isn't possible, let the employee know when it will be ready. Then, explain the severance package, if there is one. If you're not going to have an exit interview later on, you can explain the status of the worker's benefits.

Keep Notes of What Was Said at the Meeting

This can help your memory if there's ever an issue about who said what.

Collect Company Property

If you trust the employee, there's no reason to grab the company credit card or cell phone instantly. You can arrange an orderly turnover after the employee has digested the termination. But if there's a chance of violence, theft or sabotage, you do need to act quickly to secure your property and block the employee's access to the computer system, company files and building.

Keep It Confidential

Tell people about the termination and the meeting only on a need-to-know basis.

Use an Exit Interview to Tie-Up Loose Ends

If you follow up with an exit interview some days after the firing, there's a lot you can cover, such as:

  • Explain what will happen to job benefits such as health insurance, stock options and retirement plans, and whether the employees is eligible for unemployment benefits.

  • Remind the ex-employee about any confidentiality agreement he may have signed.

  • Retrieve any confidential documents and other company property the ex-employee still possesses.

  • Review any noncompete agreement the ex-employee signed.

  • Present a severance agreement in which the ex-employee releases your company from legal liability in exchange for extra money or benefits.

The exit interview is also a good time to explain how you plan to handle requests for references. Finally, you can give the employee a chance to express feelings and air grievances. Your careful listening may cause the employee to abandon the idea of suing you--and you may learn something new about your business.

A Final Note

DelPo and Guerin emphasize that employees who receive unfair and insensitive treatment are more likely to sue than employees who receive fair, honest and dignified treatment.

Editor's Note: Legal strategies may vary depending on the state in which you live and the specifics of your situation. See an attorney for legal advice.

Fred S. Steingold practices law in Ann Arbor, Mich. He is the author of The Legal Guide for Starting and Running a Small Business and The Employee's Legal Handbook, published by Nolo. For more information, call 800.728.3555; visit To contact Mr. Steingold, call 734.665.0635.

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