How to Terminate an Employee: Best Practices

It’s one of the most difficult aspects of owning a business

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We've put together some best practices for when you have to let an employee go

There are plenty of amazing aspects of running your own small business. From being your own boss and the level of control you have over your professional destiny, to achieving dreams and goals you’ve always had. The positives are plenty.

However, there are downsides that come with owning your own business as well, one of which is the fact that — at one point or another — you’ll have to let someone go. Especially in the early years before you assemble a management team, you’ll be the one having those difficult termination conversations.

Figuring out how to terminate an employee can be tricky, but if you consider this advice, chances are you’ll find the process at least a little bit easier the next time you have to do it.

How do I know when I should terminate an employee?

There are a variety of factors that can dictate when it’s time to let an employee go. From layoffs to terminations for cause (when an employee commits a fireable offense), it all comes back to your business’ mission: What is your business focusing on? What are its core competencies? How will it be successful in the future?

These rules of thumb apply across the board. Any workforce reductions should be anchored in addressing these questions as should any individual termination. Even individual firings should always be tied to company rules, ideally laid out in an employee handbook.

The bottom line: You know when it’s time to let someone go when they’re no longer serving your business, whatever that might mean for your business. It could be that a salesperson isn’t hitting their numbers, or an employee is engaging in bullying and damaging your company’s culture.

The key is to be clear about what can get someone fired so both you and your employees are on the same page.

How to terminate an employee: Does it matter when?

Sometimes, when grave offenses are committed, an employee will have to be fired on the spot. Even when this happens, nothing should take place publicly in front of other employees. Firing should happen in private with an HR rep in the room, but if you don’t have an in-person HR team yet, just having another member of leadership in the room will do.

In the majority of instances when a termination is planned, the appropriate way to handle timing is to carry out the firing sometime mid-week (Tuesday to Thursday). When it comes to the timing element of how to terminate an employee, the mid-week strategy gives the employee a chance to immediately start their job search, file for unemployment, and otherwise take care of necessary logistics on their end.

While companies sometimes tend to favor firing employees on Fridays because it’s easiest for payroll, it’s not what’s best for the employee. A Friday termination gives ex-employees all weekend to stew over the event and very few opportunities to do something about it.

What should I consider before I decide how to terminate an employee?

There are 2 important elements that you should consider before terminating an employee: discrimination and performance metrics.

It’s important to make sure that you don’t fire a protected class, even inadvertently. Even if it wasn’t your intention to discriminate, you can still be held accountable when dealing with protected classes.

This is why having a solid performance metrics system is important. This way, you have clear data and evidence to back up your decision to let someone go. Not only can this help to make things clearer and more actionable for the employee in their next job, but it can help protect you and your business from legal issues down the road.

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