Thinking Through Terminations

“I need to eliminate a few people in my company due to financial issues. Can I just fire the poor performers?”

My HR Survival Tip

I’m happy to report that most companies have concerns when terminating employees. Unfortunately, about 30% of you are only worried after the fact.

As a side note, the word “termination” is used by HR for all the reasons an employee and company no longer have a working relationship. It isn’t just when you fire someone. “Discharge” is the word EDD uses for involuntary terminations (you fired them).

It’s better to make informed decisions before you take action because, after the fact, all you can attempt is some damage control. There are several reasons you might want to end the employment relationship and here are the most common ones:

• Discharge: You are firing the employee and have a reason for doing so. The reason could be performance, attendance, etc. Although California is at-will (either you or the employee can end the relationship at any time for any reason), I find it best to give the employee a simple reason. Simple means just the bare bones that, hopefully, repeats what you’ve already talked with this employee about in meetings or performance documentation.
• Eliminating the position: This is a red flag so make sure you are truly eliminating this position and not just the employee. My standard rule for a position elimination is that you can’t hire someone to do that type of work for at least 6 months. It doesn’t matter if you change the title, it’s the work itself that’s actually being eliminated.
• Downsizing: This is most commonly used for more than one employee as the result of reorganizing the department or the company to save money and/or reduce redundancy. Be very careful here because this is ripe for lawsuits based on discrimination of one type of another. Be prepared to justify why each employee was chosen. Hometown Buffet is dealing with a lawsuit right now… they closed without sending out the legally required notice to the affected employees. If found guilty, they will owe each of those employees 60 days of back pay and medical insurance reimbursements, plus a penalty of $500/day.
• Layoff: Legally, you are implying you will rehire this employee when you can. Companies tend to use this as a way to soften the blow but you could end up in trouble if the employee finds out you’re hiring again and didn’t notify them. Use this reason only if you actually would like to rehire that employee when things pick up.

Terminations aren’t easy… for the employee or you. But they shouldn’t be. The termination reason, method, and legal risks should be well thought out before taking action.