How to Dismiss an Employee from Your Business

A woman getting fired by three of her superiors

Unfortunately, as a business owner, you need to know how to dismiss an employee. Regardless of the reason – whether it's for poor performance, a severe breach of contract, or if the staff member in question is just not a good fit – there is a pre-determined process that you should always adhere to.

This doesn't just mean from a legal perspective, either; firing someone should always be a last resort. Unless the employee in question has done something so serious that it warrants their immediate dismissal, you should have an escalating policy in place that is written into your company's HR handbook.

To explore this process in more depth – and to know how to act professionally, gracefully and in a legally correct manner throughout - we've compiled a brief guide on how, if no other solution can be reached, to fire one of your employees.

Is Termination the Right Response?

 Before things go as far as dismissal, you first have to consider two things. Primarily, you need to consider if the reason for termination is justifiable in itself, while the second point is whether or not you have taken any steps to try and assist your employee.

Indeed, dealing with an underperforming employee is one of the most common management challenges that you will encounter. If somebody's standards are slipping, you shouldn't automatically hit the "terminate" button; try first to understand the cause and what can be done to help the employee in question improve.

This doesn't mean that slack performance should be tolerated, though, and your workforce should be made aware of this. To prevent potential issues from arising, the distribution of an employee handbook upon hiring a new worker is crucial. It should outline and establish your business' work ethics, rules and regulations, and disciplinary policies, as well as guidance on how your employees can approach upper management or human resources, should any dilemma arise.

The Termination Process

Only once things have escalated to a serious point should you start formal proceedings against the employee. To ensure that you are protected against industrial legal action further down the line, you should keep hard copy records of everything that is said (verbal acknowledgement is not admissible) and, if you have one, ensure that there is a senior HR representative involved throughout the process.

Step 1: Investigate the Situation

First and foremost, you should begin a formal investigation into the situation. Be sure that your documentation clearly outlines the initial complaint or disciplinary issue with the employee, as well as all relevant details of the investigation itself. This means a full list of participants, including what was said in any interviews and who said it.

This is an important step, because after completing the investigation, you may actually discover that the complaints or performance issues that were raised were simply a misunderstanding, a false allegation or not the fault of the employee in question. In such cases, the situation can be resolved with a straightforward conversation, avoiding any potential discussion about dismissal altogether. Moreover, it may give you insight into existing issues within your workforce and help you to prevent a similar occurrence from happening again.

Also, be aware that any investigatory actions should be conducted in person - not via email or telephone calls.

Step 2: Provide a Warning

If, after conducting the investigation, you conclude that your employee is indeed at fault, then you need first to provide them with an official warning. For situations where the complaint is minor or does not warrant further escalation at that point, this can act as a first warning, with no other disciplinary action to be taken.

However, for more serious indiscretions, including sustained reduced levels of performance, it may be considered the employee's first and only warning. Regardless of the type of caution issued to an employee, be sure that you are very clear about why you are warning them, as well as what the next steps will be, should they fail to improve. Once this has been explained thoroughly, have the employee in question sign a document outlining everything that you just described, acknowledging their comprehension of both the present caution and the potential future repercussions.

Please note that in severe cases such as sexual harassment or assault, violence or threatened violence, theft of company money or property, falsification of records, or any other illegal action, immediate termination with cause (i.e. with no warning) is acceptable, although, if you don't have any proof, you should issue a suspension first pending an investigation. Either way, be sure to reference your relevant local labour laws to ensure that you are not wrongfully terminating the employee. 

Step 3: Be Professional

If you have conducted your investigations, issued warnings, or have proof of a severe breach of contract, then you have no option left but to dismiss your employee. For yours and your company's protection, it is absolutely vital that you have sound reasons and documented evidence to support the dismissal; termination due to age, race, or gender — among other unlawful discriminations — is not an acceptable reason for termination and a disgruntled employee might try to claim one of these reasons as a basis for a lawsuit.

When it comes to delivering the news, you should always speak to the employee in question face to face. Ensure, too, that you adhere to the following points:

  • Be prepared, and calmly explain your reasons for the dismissal.
  • Reiterate the previous warnings that have been given and refer to the documentation that they had signed off on. If it is a severe one-off breach of contract, point out where in the contract that it says you are eligible to dismiss them.
  • Ensure that the process is concise and does not linger for longer than necessary.

When speaking to your employee, do so calmly and gracefully, but be prepared for them to react negatively. They may become emotional and even angry; nevertheless, it is your duty to remain calm and collected throughout the entire process. 

Step 4: Honour Your Existing Agreements

Just because your employee has left, it doesn't mean that you can ignore any post-termination laws that are in place. For instance, you must continue to follow both company policy and legal protocol, including payment for all hours worked up until the moment of termination. If you are required to give your employee two weeks' notice, you may still dismiss them immediately but will have to provide them with the equivalent of two weeks' pay.

Additional legal requirements, which are often dependent on the cause for termination, will dictate if you are responsible for such considerations as severance pay, unemployment options, and a limited continuance of their insurance policy (if there is any in place). Before dismissing an employee for poor performance, be sure that you make yourself fully aware of any and all post-employment legal requirements, in order to avoid any counter-litigation during the fallout.

Terminations are rarely amicable, but if it is possible to prevent conflict, be sure that you take steps to do so. However, should you be presented with legal action, always consult with a qualified and trusted employment lawyer before you proceed any further. 

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Nobody likes putting someone out of a job, but ultimately you have to look out for the wider interests of your business. If an employee is not pulling their weight or they have done something seriously and irrevocably wrong, then you have no other option but to get them away from your company.

The important thing is to ensure that you have a solid reason — one that is as professional as it is legally sound — and that you adhere strictly to the dismissal process. By following these steps, you can rest assured that an otherwise unpleasant necessity can be handled correctly and professionally.

Do you have any other tips on how to fire an employee? Let us know your thoughts in the comments below.