Employment Termination Best Practices, Part One: Preparing for the Termination

Employment attorneys and in-house counsel are used to the 4 p.m. phone call informing them that an employee must be terminated “today,” followed by a request for a separation agreement or advice on how to handle the termination.  More often than not, after asking a few questions we discover that, perhaps, the termination should be slowed down to ensure that we do it right. So, how should you prepare for a potential termination?  Get started with these three tips:

1. Assess the reason for the termination.

Often, the reason given for terminating an employee is that he or she was not a “good fit” – a conveniently vague term that ranges from a host of legitimate business reasons to code for unlawful discrimination.  Consequently, you need to drill down to what the real reason is for selecting this individual for termination at this time.  Eligibility for unemployment benefits and continuation of certain other benefits, such as health insurance, may be dependent on the reason for termination.

2. Review the personnel record.

A review of the personnel record will help to assess whether the reason you are given is genuine and, just as important, supportable through documentation.  These records may reveal documented disciplinary issues justifying the termination, or prior complaints by the employee of unlawful company conduct which may cause the termination to be viewed as retaliation.  Massachusetts requires that employers with 20 or more employees maintain the personnel records of every employee during employment and for 3 years after termination of employment.  Uniquely, Massachusetts also requires that any record containing negative information about the employee and which may be used in determining or changing the employee’s terms and conditions of employment, be shared with the employee within 10 days of putting such information into the personnel record.

3. Review agreements which contain any post-termination obligations.

Another key set of documents to review are any documents containing obligations which continue past the employee’s termination, including: employment agreements, commission payments, non-competition agreements, confidentiality agreements, benefit plans and equity grants.  Additionally, you should be aware of what does not exist.  For example, if ensuring that the employee does not solicit existing customers with whom the employee has had contact is important but no such agreement exists, consider including such a provision in a separation agreement (in exchange for severance pay or something else to which the employee is not already entitled).

Following these three tips will help to ensure that your company is thoroughly prepared for a potential employee termination.  My next post will discuss possible exit interview scenarios and post-termination activities.  Stay tuned!