How to Terminate an Employee Correctly: A Guide

Terminating an employee is one of the most challenging aspects of running a business. It's a decision that can impact your workplace, team dynamic, morale, and productivity.  When handled improperly, it can lead to legal disputes, damage to the company's reputation, and strained employee relationships. 

No matter the situation, employers should strive to ensure employment terminations are carried out legally, professionally, and with respect and empathy for the employee involved. Here’s a guide on how to terminate an employee properly and maintain professionalism throughout the process:

Employee termination checklist

Before finalizing your decision on terminating an employee, you can always consider the alternatives. These may include exploring options like performance improvement plans, reassignment, or a change of responsibilities. However, if you believe termination is the best course of action, then here is a checklist of steps you can follow when carrying out an employee termination:

Review employment contract

Carefully examine the employee's contract or agreement to understand any specific terms related to termination notice, severance pay, or other obligations.

Document performance issues if needed

If necessary, compile a record of the employee's performance issues, including dates, descriptions, and any corrective actions taken. Sometimes the termination involves the employee’s past misconduct. In that case, you should also have those records prepared.

Determine notice period and severance pay

Calculate the appropriate notice period and severance pay required by employment standards and provincial regulations. This is typically based on factors like the employee's length of service and the reason for termination.

Gather necessary documentation

Prepare all documents related to the termination, including the release form, severance package agreement, performance records, and any other relevant paperwork.

Consult HR or legal departments

Seek advice from your internal or external HR consultants or legal counsel to ensure the termination is in compliance with employment laws and company policies.

Prepare termination meeting

Plan the termination meeting, including choosing a private, quiet, and comfortable location and arranging for an HR representative to be present if needed.

How to conduct a termination meeting

When conducting the termination meeting, employers should be compassionate and empathetic while clearly communicating the reasons for termination. Allow the employee to ask questions and express their concerns. Provide information on final pay, including accrued vacation and any other benefits or entitlements.

Here is a checklist to help you ensure the process is both respectful and professional for both onsite and remote work terminations:

Meet the employee privately

Conduct the termination meeting in a private and quiet space to preserve the employee's privacy and dignity. For both onsite and remote work terminations, make sure the meeting won’t be interrupted by other employees or business functions.

Explain the reason for the termination

It’s essential to maintain honesty and transparency during this process. Although not required by law, giving the employee a reason for their termination can help them come to terms with it. Whether it’s due to a business decision, financial reasons, or that the employee has failed to meet the terms of a performance improvement plan, you should clearly and respectfully explain why they are being terminated.

Let the employee speak

Give the employee a chance to respond, ask questions, or express their feelings. Be empathetic and attentive. If you approach the termination too harshly, the employee may feel that you don’t value or appreciate their service to your company. This may lead to negative online reviews, a spread of damaging opinions about you as an employer, or a potential loss of your business’s reputation. 

Provide termination notice, severance, and final pay

Hand over a termination letter, final release, and/or document that outlines the termination date, any severance pay, and next steps. Explain the final paycheque details, including the timeline for receiving it, and any outstanding benefits and entitlements. If you offered a severance package and the employee has accepted it, ensure that all terms are properly understood, signed, and agreed upon.

Benefits continuation and pension plans 

Offer information about the continuation of benefits, such as health insurance, vision and dental coverage. Explain how the termination impacts pension or retirement plan contributions and let them know about options for transferring or withdrawing funds.

Collect company property

Ensure that all company property, such as keys or keycards, ID badges, security passes, important files and documents, and equipment and laptops are returned or can be mailed back to the company. You can also arrange to have this done after the termination meeting.

Discuss transition

If necessary, discuss the employee's transition, including any knowledge transfer, client handovers, or exit procedures.

Offer to provide references and support

Give the employee information on outplacement services, job search assistance, or counselling resources that your company may offer. To end the termination meeting on a positive note, you could also offer to be a reference for future employment checks or provide them with a letter of reference or recommendation. This will be a great way to help them secure another position.

What to do after the termination

After terminating an employee, employers can follow these steps to ensure a smooth transition and maintain workplace harmony, morale, and continuity: 

Maintain professionalism and confidentiality

Stay professional throughout the termination process and avoid the spread of rumours, confrontations, or arguments in the workplace. Respect the terminated employee's privacy by not discussing the details of their termination with other employees.

Update internal records

Notify relevant departments, such as IT and payroll, to update records and deactivate the employee's access to company systems. Ensure that the terminated employee's name is removed from company directories and communication channels.

Announce termination of the employee

Inform relevant team members, stakeholders, and clients about the termination so they can prepare for any work adjustments. Determine how the terminated employee's responsibilities and workloads will be redistributed and provide a timeline for replacing the employee if needed.

Do you need help with employment terminations or layoffs?

Our qualified HR experts can help you carry out employment termination, offboarding processes, and develop essential documentation. See how we’ve helped 6500+ small and medium businesses across Canada succeed. Call an expert today at 1 (833) 247-3652 for free HR advice and to learn more about our services.