Firing an employee, or terminating an employee’s contract, can occur for several reasons, ranging from conduct to capability. You should explore all available options to support the employee first, but if they are still not fulfilling their contract or are not a good culture fit then it is often in the best interests of both parties to terminate the contract.
As terminating an employee’s contract is an official process that may have legal repercussions, it’s important to get it right. There are a number of things you can do to ensure you treat your employee compassionately while avoiding the risk of legal action.
Reasons for Firing an Employee
Many US states work under “employment-at-will” policies, where employees may be fired for any reason, at any time. However, even in an “at-will” environment, this is not a simple process. You need to make sure that the reason you are firing the employee is a legal one. There are five fair and legal reasons for dismissal:
- Statutory illegality
- Some other substantial reason (SOSR)
Dismissal for conduct
Employees will usually only be fired for conduct in cases of gross misconduct or after several instances of repeated, but less serious misconduct. Gross misconduct usually consists of illegal behavior such as theft or serious breaches of health and safety. Misconduct could be anything from repeated instances of lateness to insubordination.
When dismissing for conduct, it is important to be compliant with your organization’s processes. If the dismissal results in an employment tribunal, this is the first thing the court would look at. It’s therefore vital to clearly set out the company’s behavioral expectations in the employee handbook. Have all employees sign the handbook in acknowledgment of its contents. Also, make sure that you have a clear and robust disciplinary policy, and that any verbal warnings given to employees are clearly documented. Your policy should also outline your disciplinary procedures so employees know what to expect.
Typically the disciplinary process resulting in termination consists of three stages—investigation, disciplinary hearing, and appeal—and should be followed in this order to ensure a fair and consistent experience for all employees. If you do not follow a clear, justifiable procedure, you run the risk of employees claiming unfair or constructive dismissal. This may result in very costly and time-consuming legal cases being raised against your company.
Note that you may dismiss an employee with or without notice. Dismissing without notice—often called summary dismissal—usually occurs when an employee has committed gross misconduct. In such cases, you do not have to pay the employee their contractual notice period, but you do still have to pay them any holiday allowance they may have accrued. Otherwise, they may appeal based on a breach of contract.
There is a common misconception that summary dismissal means being fired on the spot. In fact, you still need to follow a consistent procedure when an employee is being summarily dismissed. Firing on the spot usually only happens after a serious incident where an investigation is not necessary, such as a serious physical fight between two colleagues with multiple witnesses.
Dismissal for capability
When an employee’s ability to do a job is impaired by their health, physical or mental skill, or aptitude, you might consider dismissal for capability. However, you should first try to support them in their role through training or redeployment to another department (where possible).
If you are dismissing for capability based on skill or aptitude, you should first try to verbally coach the employee in their role and make sure they’ve had the correct training to do their job effectively. Be sure to document this as you may need to refer to it at a later date. If this doesn’t work, you should then put the employee on a formal performance improvement plan (PIP) with measurable, achievable goals. You should assess performance regularly through one-to-one meetings and provide the necessary training for any matters arising.
These one-to-one meetings are also an opportunity to provide any further verbal warnings to the employee that should their performance not improve, they may find themselves being dismissed. Make sure you thoroughly document this via a follow-up email or letter to ensure you have a paper trail of your conversations.
Whilst training is an important part of dismissal for capability, you should also consider whether the employee’s capability to do their job is affected by a physical disability, a hidden disability, or a temporary injury such as a broken leg. In these cases, your approach will be very different and more empathic, working with the employee and their healthcare provider to find a solution.
In cases of temporary incapacity, you should put the employee on adjusted duties or, where possible, consider allowing them to work from home for a period of time. While this is not legally necessary, it helps contribute to a strong company culture where employees feel supported.
In cases of long-term ill health or disability, you should refer the employee to an occupational health service. You could also consult with their doctor (with their written consent) to understand whether you could make any changes to their role to support their performance.
Any suggested adjustments should be considered based on their relative merits and how likely they are to support the employee in the workplace. You should put these adjustments in place and support the colleague through one-to-one meetings for a reasonable amount of time to allow them to adjust to the new routine.
However, in some cases of serious health-related incapacity, despite exploring every avenue of support, you may decide it is in both your and the employee’s best interests to terminate the contract. Here, it is vital to behave empathically and to carefully consult with your employee at each stage of the dismissal process, so as not to leave yourself open to a disability discrimination case.
It should not come as a shock to the employee that they are being dismissed for their capability. Usually, in cases of ill health or disability, the consultation and support process has been so long that the dismissal almost becomes a mutual agreement between employee and employer. Reaching this stage in a capability termination will minimize the risk of a tribunal case, as the employee will feel that you have genuinely acted in their best interests. This is not only a sound business decision, but it is also morally the right thing to do.
If your workplace is downsizing, re-structuring, or closing altogether then you may have no option but to make employees redundant. Unlike firing due to conduct or capability, redundancy is no one’s fault. This type of dismissal will follow a robust process of consultation, hard decision-making, and regular communication.
When deciding on candidates for redundancy, you should not take into account the employees’ respective financial situations. Instead, ensure you have a clear selection process based on skills and experience, attendance record, disciplinary record, performance standards, and aptitude for work. You should also ensure that your actions comply with any legislation relating to protected groups, such as the Pregnancy Discrimination Act.
Statutory illegality is where it becomes illegal for an employee to continue working within their role. As a result, you will no longer be able to employ them, as in the following situations:
- The employee needs to drive to do their job and their driver’s license has been revoked.
- The employee has had their visa revoked and continuing to employ them would breach immigration laws.
- The employee works with vulnerable people and is convicted of a dangerous crime.
In such cases, you must still follow a formal dismissal procedure and allow the employee the right to appeal should their circumstances change.
There are many other reasons why an employee might be fired from their job, usually involving a breakdown of trust between employee and employer. SOSR has been used as a reason for dismissal in cases where continuing to employ the colleague would cause irreparable reputational damage to the company, or where there is substantial client pressure for the colleague to be dismissed.
In these situations, as long as you can prove that you followed a fair and reasonable process, SOSR can be a catch-all for any fair reason for dismissal not covered by the other categories.
What To Do When You Are Firing an Employee
For whatever reason the employee is being fired, it’s not easy news to receive. Therefore, as well as being clear, it’s important to be kind. First, explain to the employee that you are terminating their contract. Detail how you have reached that decision, what support the company has provided to them, and how you have warned them that this was the likely outcome. Try to say something genuine and positive about your employee’s tenure with you, and confirm that your decision is final.
Make sure you involve the employee in the conversation. Ask them if they have any questions and listen to their understanding of what has just happened. They could become emotional or angry, but it’s important to remember that this isn’t personal. Take care with your tone: it’s important to be firm but empathetic as you deliver this news.
You should then outline the next steps to the employee. Let them know that they have a right to appeal against your decision. You should also explain how and when they will be paid their notice period. Explain how they can return any company property and ask them for a forwarding address in case you need to send them any correspondence. It is then time for the employee to leave the site.
What To Do After Firing an Employee
Be aware that a disgruntled employee may try to take or damage company property as they leave. You will therefore need to escort them off the premises, making sure they have returned any keys or entry passes. The employee may ask to say goodbye to their colleagues or to collect their personal possessions from their desk, which you should oblige.
After firing an employee, in order to preserve their dignity, you should notify only the people who genuinely need to know. Draft an email with only the most important information—that the colleague is no longer with the business and their workload will need to be distributed while you recruit a replacement.
Make sure you thoroughly document the conversation you had with the employee and send them a letter confirming your decision. Include the reason for the dismissal and all the training and support you gave them along the way. Be sure to keep hold of any training records or any other evidence that supports your case should the employee decide to raise a legal claim against you.
There are several reasons why an employee might be fired, and ultimately if the employee isn’t right for the company then it’s often in the interests of both parties to terminate the contract. However, whilst you are making the decision that is best for your business, it’s important to remember there’s a person sitting in front of you. Treat them with dignity and empathy, and choose your words carefully. Above all, make sure you’re firing the employee for fair and legal reasons, and that you have a clear and robust policy to follow.