This article is intended to provide general information only. It is not intended as legal advice or as a solution to an individual problem. You are encouraged to consult with appropriate legal counsel prior to relying on this document in whole or in part.
Employment terminations generally fall into two types: voluntary (initiated by the employee) and involuntary (initiated by the company).
Involuntary terminations include those where an employee is fired; for example, for poor performance or violation of company policies.
Involuntary terminations also include terminations due to a layoff, reduction in force, or company reorganization.
A “good” termination can benefit both the employee and the company and can reduce the chance of that the termination will result in litigation against the organization. A good termination involves three things: (1) preparation; (2) planning; and (3) follow through.
I. VOLUNTARY TERMINATION OF EMPLOYMENT
In a voluntary termination, the employee resigns from his or her position with the organization. The employee usually gives management some notice prior to the resignation date (two weeks is average). Issues to consider and actions to be taken by management prior to the separation date:
- Find out why the employee is resigning.
- Decide if the company will counter-offer. If the counter-offer is accepted, is the company willing and able to live up to the terms?
- Does the company want the employee to work through the notice period? If not, the company must be prepared to pay the employee for the notice duration, or run the risk of changing a voluntary termination into an involuntary termination where the employee may be eligible for unemployment compensation.
- What are the organization’s expectations of the departing employee?
- Help train other employees or a replacement
- Complete work-in-process
- Advise supervisor of on going work or projects
- Clean out work area of personal belongings
II. INVOLUNTARY TERMINATION: THE EMPLOYEE IS FIRED
Being fired should never be a surprise to the employee!
- If it is due to an ongoing problem, has the employee been warned? Is there appropriate documentation?
- Is the termination due to an action or situation that requires immediate action by the company?
- Is the termination based on a series of events for which no documentation is available?
A. Preparing for the Involuntary Termination
- Investigate; get all the facts–not opinions.
- Decide who will handle the termination (it is usually a good idea to have two people present).
- Decide when and where the termination will take place.
- Go over the final decision for the termination and review the documentation.
- Be prepared for the employee’s reaction to the termination.
- Make sure the appropriate paperwork is ready.
- Determine the “official” reason for the action (do not couch the reason for action).
- Plan to allow the employee to get personal items from the work area.
- Plan for the employee’s reaction.
- Emotions will be high regardless of “surprise factor”
- Are there security issues?
- Client lists
- Computer system
- Personal security
- Plan the message to be delivered to individuals the employee dealt with outside of the organization.
C. Follow Through
- Conduct termination meeting with the employee
- Stay focused on the facts of the decision – not personal opinions
- Do not let the discussion become personal
- Be ready for the employee’s reaction and let him/her vent
- Do not allow for negotiation; the decision has been made and is final
- Advise co-workers that the employee is no longer works with the company.
- Advise supervisors and co-workers what the “company statement” will be for customers, clients, etc., calling for the employee.
- Document the file.
III. LAYOFFS, REDUCTIONS IN FORCE, REORGANIZATIONS
The company situation will dictate whether or not there will be advance notice of a layoff. Expect productivity to be low once employees become aware that a layoff is planned.
- Criteria for the layoff (by department, length of service with company, temporary layoff or permanent, etc.).
- Once employees have been selected for layoff, review the choices; be sensitive to potential claims of disparate impact.
- Decide if the company will offer a severance package and whether it will be conditioned upon a release of claims.
- Decide if there will be outplacement assistance offered.
- Prepare the appropriate paperwork (pink slips, COBRA notification, payroll information, pension, etc.).
- How will the layoff be handled?
- Who will advise the employees?
- Who will be available for follow up questions?
- When will the layoff take place?
- Where will the layoff take place?
- How will the employees be notified?
- Will there be a person/place to go to talk about the layoff?
- Will there be any security issues?
- Client lists
- Computer systems
- Personal security
- Plan for continuation of work-in-process.
- Plan for internal and external “rumor control”.
- Decide who will discuss the “terms” of the layoff.
- Will there be any recall (temporary or permanent layoff)?
- What will be the message to the remaining employees and how will the message be given to them?
- Plan the message to customers, vendors, etc.
C. Follow Through
- Handle layoff discussions as planned.
- Be ready for personal discussions with laid off employees.
- Have their pertinent information readily available.
- Allow employees to collect personal belongings.
- Advise remaining staff when layoff notification period is over.
IV. INFORMATION TO BE PROVIDED TO THE EMPLOYEE ON TERMINATION
- Healthcare plans: Notice of continuation rights under COBRA or state continuation law, election form(s), and a certificate of creditable coverage pursuant to HIPAA.
- Group life insurance: Employees covered under a group life insurance plan generally have the right to convert to an individual policy without a physical examination.
- Pension, profit-sharing, and other retirement plans: Check the requirements of all ERISA-regulated employee welfare, pension and profit-sharing plans to see if you must give the employee a “Notice to Terminated Vested Participants” (normally this doesn’t have to be done for several months).
- Information concerning any other benefits that may apply to the employee (i.e., outplacement assistance, severance plans, information on when benefits such as disability insurance will end).
- Unemployment Compensation: Separation Packet (formerly known as the “pink slip”); should be given to all terminating employees, regardless of whether the termination is voluntary or involuntary.
- Final paycheck
- Voluntary terminations: Employee must be paid by the next regularly scheduled payday after the date of termination. Payment may be made either through the regular payment channels or by mail (certified mail, return receipt requested is a good idea for documentation). (Conn. Gen. Stat. Sec. 31-71c (a).)
- Discharge (fired): Employees must be paid in full not later than the next business day following the date of discharge. (Conn. Gen. Stat. Sec. 31-71c(b).)
- Layoffs: When work of any employee is suspended as a result of a labor dispute or when an employee for any reason is laid off, the employee must be paid in full not later than the next regular pay day. (Conn. Gen. Stat. Sec. 31-71c(c).)
If an employer policy or collective bargaining agreement provides for payment of accrued fringe benefits upon termination, including but not limited to benefits such as paid vacation, holidays, sick days, and earned leave, and an employee is terminated without having received such accrued fringe benefits, the employee must be compensated for such benefits (exclusive of normal pension benefits) in the form of wages in accordance with the policy or agreement. (Conn. Gen. Stat. Sec. 31-76k).
As a general rule, employers cannot withhold a final paycheck pending the return of company property, and cannot make deductions from a final paycheck for the cost of unreturned or damaged property unless the employer has written authorization from the employee for the deductions on a form approved by the Department of Labor. (Conn. Gen. Stat. Sec. 31-71e).