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Properly Terminating an Employee

Terminating an employee is not always easy but is sometimes necessary for the efficiency and well-being of your company. It can also be the best thing for an employee when the job isn’t a good fit for them or you. Terminating an employee that isn’t a good fit frees them to find a job that is a better fit for them.

Employee termination procedures are formal, documented processes for the dismissal of an employee. They are usually spelled out in the employee policy manual or Employee Handbook. (Do I need to nudge you again toward having an Employee Handbook?) Employee termination procedures should include the following: the reasons for termination; whether the termination is final; whether the termination is based on performance, conduct, or other causes; an appeal process if any; and the employee’s rights as a former employee. The reasons for termination should indicate whether the employee has been given the opportunity to improve through a PIP.

The laws regarding the reasons an employer may terminate an employee are state-specific, however, most states are “employment-at-will” states. Illinois is an “employment-at-will” state. You can terminate an employee for any reason, or no reason, without any notice. As long as it is not a discriminatory reason.

If you have an agreement with an employee that has a termination provision that gives the conditions for termination, you may not be able to terminate that employee without a reason or notice, except for cause. You will be required to follow the terms set out in your agreement with that employee.

It is important an employee is terminated properly and there is a plan in place for the termination process. Because terminating someone has significant legal implications, you should consult with a lawyer before beginning the process of terminating an employee. If you do not have a plan in place, you may face potential lawsuits for wrongful termination. You should communicate with the employee and be sure the employee understands the reasons for termination before you implement the plan. The plan should be communicated to the employee when they are notified of their termination.

Make sure you follow a documented, formal plan for termination. When terminating an employee, follow these steps to make sure the employee has a clear understanding of the process.

Suggested steps to a successful termination:

  1. Complete a thorough review of the PIP.

  2. Create a letter of termination.

  3. Schedule a meeting with the employee and have at least one witness present.

  4. Inform the employee they will be terminated.

  5. Inform them of their rights.

  6. Discuss how the termination will be communicated to co-workers.

  7. Provide the employee with an opportunity to ask questions and confirm their understanding of the process.

  8. Sign the letter of termination and have the employee sign it.

  9. Provide a copy of the letter to the terminated employee.

  10. Accompany the employee while cleaning out their workspace.

  11. Terminate any electronic access to company computers or information systems.

  12. Collect their employee ID, building key, and any other company property.

  13. Comply with all state and federal laws regarding severance or last payments owed.

  14. Depending on the circumstances, you might consider changing the locks on entry doors.

  15. Transfer the employee’s necessary work responsibilities to another person.

The employee should be given a written letter notifying them they are being terminated and it can include the reasons for termination. It can be titled, “Termination Letter,” “Notice of Termination,” “Employment Separation Letter,” or any similar title. The Termination Letter should include details of the employee’s dismissal. Include the name of the employee, their title or position, and the name and contact information of the manager or HR person in charge of the process. If for cause, you can provide a description of the event or events that resulted in the decision to terminate the employee. Include information from the performance improvement plan or include a copy of it. List when any benefits will end, including health benefits or insurance. Provide details about any severance pay, final paycheck, or payout of vacation time, if applicable. List the employee’s termination date. Include a reminder to the employee they are required to return any company property they may have in their possession. Have the employee sign a copy of the letter and keep it in their personnel file for future reference if needed. If the employee refuses to sign, note that as well.

Properly terminating an employee is an important part of maintaining your company culture and mitigating the potential for future lawsuits. Creating a written process for improvement as well as termination will prepare you for the inevitable employee performance issue. This is another area I strongly suggest you get assistance from a lawyer in drafting your PIP and termination process. If you don’t have an HR department, guidance from a lawyer before and during the actual termination process is money well spent in mitigating future liabilities that could arise from a wrongful termination lawsuit.

You can get more information about our flat-rate employment law services here.


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