When to Let Go: A Review of the 4 Main Reasons for Employee Terminations
At some point or another while running your business, you unfortunately will likely need to let someone go, also referred to as a separation or termination of employment. Typically, businesses run into these reasons because either they are cutting costs or have someone performing poorly at their job. Majority of states across the nation, are at-will, meaning they have the right to separate employment at any time. However there are some caveats, therefore your Human Resources team should always keep detailed records to justify the decision to ensure that employee’s rights are not violated and to ensure all federal and state laws are followed during the process.
Employer-Driven Vs. Employee-Driven Seperations
Let's look at the primary reasons why an employer may need to terminate an employee. The first two are employer driven - cost cutting and relocation of the company. The next two reasons are employee driven - these are violation of company policy or poor performance.
- Cost Cutting: When times are tough, companies may find the need to reduce operations due to a loss of supply and demand for products or services in the manufacturing sector for instance, or due to a loss of a contract in the government contracting industry. Companies should cut non-essential positions first since these are not a necessity for business operations. This type of elimination is considered a reduction in force (RIF).
- Relocation of Operations: There are times when a company relocates its operations due to lack of a labor pool in the current market, new opportunities and/ or the company is choosing to move to a less expensive location. The employee may not want, or be able, to relocate so therefore their job is eliminated.
- Violation of Company Policy: Companies have policies and procedures in place for a reason – to ensure things are done consistently, and efficiently by all employees. By having written policies in place this provides companies’ a means of making sure their message is communicated to everyone. When an employee fails to abide by a policy, in some instances it can be grounds for immediate termination. Some policy violations that fall into this category are, for example: theft, drug use, sexual harassment, destruction of company property, possession of a firearm on company property, etc.
- Poor Performance: Most employees who come to work are productive and are striving to be successful. You will, however, come across employees where this is unfortunately not the outcome. There are times when you will have an employee who may continuously show up late to work or will produce inadequate work. If this is the case, you will want to hold these employees accountable for their performance by documenting their poor performance, utilizing the corrective action method in place for your company. If the performance is documented and improvement is not seen, this may lead to eventual termination.
Regardless of whether the termination is employer or employee driven, the most important thing to remember is to document, document, document. If it is not documented it did not happen.