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The Alternative Board Blog

When Is It Time To Fire an Employee?

May. 10, 2023 | Posted by The Alternative Board

Terminating an employee is never fun. Even for the most polished and seasoned business owner, the process of letting someone go is almost universally stressful, unpleasant and emotionally challenging. Nobody wants to be the bearer of bad news or the person that squashes someone’s career goals, but as the leader of your organization, it is imperative that you lean on objectivity to guide you in the firing process.

Telltales of an Unsustainable Employee

While no two situations are identical, there are common signs that a worker just might not be working out. Common red flags when considering terminating an employee include:

  • Consistent underperformance
  • Disagreeable attitude and negative impact on others
  • Chronically late or calling in sick
  • Unwillingness to work cooperatively
  • Reluctance to follow instructions
  • Multiple customer complaints
  • Consistent and sometimes costly mistakes
  • Failure to adapt

But even this list gets tricky to navigate. How much of an underperformer does this employee have to be to consider letting him or her go? How valid are those customer complaints against them? Is this person really the root of a negative environment or is someone else in the office just more stealth at causing discontent? These are the grey areas that can lead to a lack of action on the business owner’s or HR manager’s part.

But drawing out the termination process doesn’t do anybody any favors and can have a huge negative impact on the productivity of your business, not to mention the positivity of your company culture. One bad egg can dramatically decrease job satisfaction for a whole department or even the entire company.

Understanding Protected Classes

Federal laws protect certain employees who are considered part of a protected class. It is illegal to fire an employee due to race, sex, religion, national origin, ethnicity, age or pregnancy. There are also State laws that cover additional categories, such as marital status, sexual orientation and others.

Know the laws that pertain to all members of your team. Employees who are part of a protected class are not immune from termination, they simply cannot be let go based on discriminatory practices.

At-Will vs Contract Employees

Every state in the U.S., with the exception of Montana, are at-will employment states (although some allow for exceptions). At-will employment essentially means that a business owner or employer can terminate an employee at any time for any reason – or for no reason at all – without legal liability. This of course excludes illegal reasons, like discriminatory practices as noted above. Likewise, an at-will employee can quit at any time, although there are really no laws mandating when an employee can or can’t quit, so the distinction is more rhetorical. Employment laws generally presume that unless otherwise specified, a worker is an at-will employee.

The dynamics surrounding the termination of a contract employee is mandated within the four corners of the mutually signed contract. Independent contractors, on the other hand, are not employees and thus cannot actually be fired, but rather their contract can be terminated or not renewed.

Before You Let Them Go

Prior to reaching the point of termination, discuss underperformance or behavioral issues with the challenging employee. First provide feedback related to the issue, then warnings if that input is not heeded.

Make sure the employee understands both your expectations and the consequences of not meeting them. Consider developing a performance improvement plan that maps out a strategy for success. Again, make sure that all these interactions and plans are documented.

The Proper Way To Fire an Employee

As a business owner with or without an HR department, it is essential to have a defined and comprehensive termination protocol that includes documentation, effective communication, and perhaps most of all, respect.

When it actually comes time to terminate a team member, meet with the employee in person and in private. Refrain from pointing fingers or vocalizing negative judgment. Rather, thoughtfully explain the reasons for their dismissal in a way that is honest and forthcoming. Some states have laws on the books that require you to provide the employee with the reason for termination. So again, know your State employment laws.

Understand that employees often become emotional in these situations, which can also be psychologically taxing on you as the business owner. Maintain compassion as they process the information, but don’t waver in your decision to let them go. This is not the time to negotiate with them for staying on. Give them time to clear out their desk.

If you feel the employee is open to it, provide them with some thoughtful, positive advice and a few words of encouragement as they navigate their termination.

Then it is time to wish them well and mean it.

Read our 19 Reasons You Need a Business Owner Advisory Board


Written by The Alternative Board

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