Employee Termination Process – 10 Ways to Streamline the Employee Exit Procedure

Employee Termination Process

There are no two ways about it – the employee termination process is not something a HR professional looks forward to! If you thought communicating the termination decision to the employee was the most difficult part of the employee exit procedure, you are in for a surprise. Handling exit procedures smoothly without causing a negative impact or legal repercussions is even more challenging. Handling the termination of employee process in a fair manner without causing damage to the company’s reputation and/or risking legal repercussions requires a streamlined human resources termination process. In this blog we will get into the details of the employee termination process, challenges faced during employee terminations, and effective ways to streamline the job termination process. 

Table of Contents

What Leads to Employee Termination?

The one and only reason why an employee is hired is that he/she is a right fit for the role. But, to let go an employee, you need several solid reasons. If you plan to terminate an employee, you should have a specific reason/s why. For instance, an employee’s behavior impacting the business by disrupting team spirit or poses a safety hazard or safety risk to employees, could be a good reason for terminating an employee. It is important to bear in mind that whatever may be the reason for terminating the employee, it must comply with the state and federal laws. 

Even before the employee termination process is initiated or the decision to terminate the employee is taken, there are few steps or processes that the HR professional must carry out. Carrying out these steps is a must for fair decision making. What are the steps?

Review the expectations set during employee onboarding – Employees are hired for performing specific roles that require them to meet certain expectations set during employee onboarding. During the course of working in the organization, employee performance needs to be evaluated against these preset expectations. Consistent failure to meet any or all of these expectations is a strong reason for employee termination. 

Conducting discussions with the candidate – The termination decision cannot be abruptly communicated to the employee. The HR personnel must regularly discuss with the candidate about their performance or non-performance. This helps them build a case for employee termination. 

Motivating the employee towards improvement – Humans are bound to falter when internal or external factors are not conducive for working. When the HR feels that employee performance is not up to the mark, having an open discussion about the reason for dip in performance and coming up with ways to get back on track is a good way to motivate them. Only in cases where such motivational discussions do not have the desired effect should the HR move towards termination. 

Including employees in Performance Improvement Plans (PIPs) – Employees who have not been performing well can be put through PIP programs. Identifying the reasons for non-performance and designing performance improvement plans around them is a great way to motivate employees. The HR can proceed towards termination in case the outcomes of the PIPs are not favorable. 

Setting performance goals – Face-to-face discussions with employees about ways to improve their performance must be followed up with setting of goals to measure their performance. Setting quantifiable goals is a good way to evaluate the improvement of the employee. The HR can make a decision based on how closely the employee performance is with these goals. 

All of the above steps must be taken by HR personnel before they decide on the termination of employees. 

Now we come to the important part in employee termination – the reasons that lead to employee termination. Like we said before, there needs to be specific and justifiable reasons why an organization would terminate its employee. Here are some common reasons for terminating an employee. 

Performance related issues – This one of the most common reasons why employees are terminated. Hiring an employee for a particular role implies that the employee must work on all the tasks assigned to him/her to the best of their ability. To assess employee’s performance regular appraisals are conducted by the HR department. It is not just the yearly performance appraisal, but there are several instances where an employee’s performance is evaluated. These performance evaluations may be conducted at intervals that are decided by the HR based on project scope. Consistent non-performance qualifies for employee termination initiation. 

Chronic absenteeism or tardiness – Employees are expected to report to work during office hours without any late coming or absenteeism. Minus the days that they are on leave (both planned and unplanned), they need to be present at the office during office hours. Continuous leave or chronic absenteeism or habitual late coming or taking leave without proper intimation are all reasons why an employee may be terminated. 

Criminal behavior – This one needs no explanation! Employees that present criminal behavior are a threat to co-workers and the organization as a whole. Such behavior can either be reported by colleagues or witnessed by HR personnel. Any instance of such behavior attracts immediate initiation of termination. 

Violent behavior at work – Employees that exhibit violent behavior at work are a threat to themselves and coworkers. There are strict HR policies against workplace violence. Whichever employee exhibits violent tendencies that cause physical or mental harm to themselves or coworkers are terminated immediately. 

Company reorganization – This is one reason where the employee cannot be held at fault for termination. When a company is taken over by a bigger concern or when there is organization wide reorganization or there is downsizing of employee strength, employees might lose their jobs. These decisions are initiated by the leadership and communicated to the HR department. The HR team then makes decisions on which employee is to be terminated based on several factors including non-performance, work experience, attitude or poor personality. 

Poor attitude or personality – It is not enough if employees perform well technically, they should be team players and show a positive attitude at the workplace. Employees that exhibit a poor personality or negative attitude affect the morale of the team. Such employees must be terminated so that they do not cause further damage to the team’s morale. 

In some cases, the reasons for termination may not fall into any of the above categories. The HR department has to make the final decision based on facts and circumstances of each case. 

What is the Termination Process?

What is the employee termination process? As the name suggests, the process adopted by the organization to terminate the employee’s services towards the organization is called the employee termination process. This process is also referred to as the employee exit procedure or the job termination process or human resources termination process. The termination of employee process is a time-sensitive procedure that involves collaboration between multiple departments. 

The termination policy definition includes all the steps and procedures that the employer must complete to formally terminate an employee are grouped under the termination process. The various departments that must collaborate for successful completion of the employee termination include Human resources, IT, department heads, and the payroll and benefits department. Seamless execution of the termination process requires centralization of communication and important employee information. 

Employee termination may result from several reasons, such as consistent poor performance, repeated non-conformance to policies or code of conduct, or company downsizing or restructuring. The decision to terminate an employee is taken only after due consideration of performance or behavioral factors, and gathering feedback from various stakeholders. The human resources department puts in considerable effort to help the employee get back on track in terms of performance or sort out any issue that the employee may be involved in that may lead to termination. Improvement or correction efforts from the HR department may include performance improvement plans (PIPs), mentoring or coaching the employee, holding candid discussions with the employee, and revising the goal setting process.

If despite all these efforts, the employee does not show any improvement or fails to meet the revised goals, or continues to cause harm to the reputation of the company and the team, then the HR makes the difficult decision to terminate the employee. In some cases, apart from these regular reasons for terminating an employee, there may be emergency situations like the employee posing a threat to himself and the team by causing physical harm, or cases of theft or arson. Such situations attract immediate termination of the employee.  

Need for a Structured Employee Termination

One of the challenging processes in human resource management is the employee termination process. It is challenging for several reasons. One is that it takes an emotional toll on the human resources personnel to make the decision and communicate the same to the employee. Second is that it entails several steps that span across multiple departments. The human resources personnel need to coordinate between department heads, IT, and payroll and benefits team to complete the employee exit procedure. It becomes extremely difficult to carry out termination steps smoothly without a structured process. Here is why you need a structured employee termination process –

1- Structured and standardized termination policies protect employees from possible legal issues or liabilities. Some termination policy examples include adhering to hiring contracts of labor laws, revising employee performance goals through performance improvement plans (PIPs), etc. When the employee hiring contract or state labor laws are not adhered to, and the employee is terminated without any cause or reason, may be grounds for a legal action against the employer. 

2- Employee termination often results in retaliation from the employee, especially when the termination happens in bitter terms. Retaliatory employee misconduct is a risk associated with unstructured employee exit procedure. Employee termination is an emotional process for the HR and the employee. In most cases, the employee who is terminated does not respond well to the decision. 

3- Employees handle sensitive business information as part of their work. When terminated, the likelihood of misuse of the information is high. Safeguarding internal information and intellectual property is paramount before the employee exits the organization. Such safeguards are implemented only when the employee termination process is structured and standardized. 

4- Most of the time, the employee who is terminated is part of a team. The rest of the team is also affected by the termination of their team member. Although, it may not be necessary to explain reasons for termination to team members, a transparent and standard termination policy ensures that there is no unrest within the team once their team member is terminated. A clear termination procedure is not only compliant with labor laws, but also provides transparency into performance and disciplinary actions that are taken against non-performance cases. 

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Steps in the Employee Termination Process

The steps in the employee termination process vary with the reason for termination. The likely reasons for employee termination are listed in the above sections. Although most of the steps are common for different reasons, a few steps vary according to the reasons for termination. Below is a common framework of the termination process and steps that can be taken depending on the reason for termination.

Termination due to poor performance or conduct

  1. Identification and documentation of performance or conduct issues – Poor performance or misconduct may be reported to the human resource personnel by the team manager. Once they get an intimation of the same, they need to document all the instances of poor performance or misconduct with adequate proof. Documentation includes performance reviews, team feedback, manager notes, or even anonymous emails regarding misconduct. It is best to document any performance of conduct issue as soon as it is noticed. In addition to documenting patterns, the HR team must also maintain a note of corrective measures that the employee has been put through. 
  2. Informing Concerned Employees of the issues. Once the HR team has put together documentation regarding non-performance or misconduct, the concerned employee must be duly informed. Employees must be informed of any actions or performance related-issues especially if it is an easily fixable issue or concern. You can refer the employees to employee handbooks or manuals to reiterate on the company policies or code of conduct. The HR personnel should document the formal notice or warning that has been issued to the employee along with the date that the employee was intimated. 
  3. Preparing a performance improvement plan – For non-performance issues, the employer must provide an opportunity for the employee to improve his performance. Employers may offer an opportunity if they feel that the employee is capable of learning and growing. For performance related cases, the HR may create a performance improvement plan for the concerned employee and communicate the same to them. This plan is a formal agreement between the manager and the employee to alter their approach towards work to hit performance milestones that demonstrate their accountability and commitment. Managers will work with employees to establish an improvement plan and set goals. Once this is in place, they also work with the employee by motivating them to work towards achieving these goals. If there is no improvement despite follow-up with the PIP, then it is in the best interest of the company to let go of the employee and initiate the formal termination process. 
  4. Coordinating with HR, IT, and Payroll – Sending out an official letter of termination is the first step in the process. This letter must include details on reasons for termination and last day of employment. These details are required for the IT, HR, and Payroll departments to navigate through the upcoming changes. The details around employee termination include company policies, employee benefits, final paycheck and disbursement, and access to company assets. 
  5. Conducting the termination meeting with the employee. After the letter of termination is issued, the personal interview with the employee must be conducted as soon as possible. It is recommended to include the HR representative, team manager, and any other person who could provide inputs, in the termination meeting. The meeting must begin with thanking the employee for their contributions, and proceed to inform them about the timeline for dismissal, their benefits, when they can expect their final paycheck, and logistics of returning company assets. 
  6. Finalizing the paperwork – An important part of finalizing the paperwork is to plan handoffs and knowledge transfer by the employee. Simultaneously, the HR department begins the recruitment process for finding a replacement for the employee after the manager signs off. 
  7. Conducting final exit interview – On the last day of employment, an exit interview is conducted. Revoking access to the workplace (both physical and electronic), returning of company assets, and handing over work documents to the manager are some of the tasks that are carried out on the last day. Conducting a farewell meeting is also a commonly followed practice, which keeps the rest of the team informed about the employee exit. 

Termination due to downsizing or restructuring 

The steps for this type of termination vary from the above steps slightly. There would be no process improvement plan or time given for performance improvement. The first 3 steps are not followed for termination due to restructuring, rest of the steps are followed. 

Best Practices in the Employee Termination Process

The employee termination process being an emotionally driven one, there are certain best practices that ensure a smooth and hassle free termination procedure. 

  1. Be transparent about the termination policy
  2. Start documenting as soon as a non-performance pattern is observed
  3. Perform a thorough risk analysis 
  4. Ensure that the personal meeting with employee is conducted in a professional manner
  5. Create a proper time frame for termination
  6. Ask the employee manager to lead the final conversation (exit interview)
  7. Provide the employee a comfortable time window for clearing their workspace
  8. Treat the employee with respect and dignity
  9. Ensure that knowledge transfer is conducted in a planned manner
  10. Explain all benefits and paycheck details to the employee

Final Thoughts 

This termination guide aims to highlight the role of workflow automation in simplifying and streamlining the employee termination process. Automating certain steps in the employee exit procedure is a great way to streamline the process. Cflow is a no code BPM solution that can automate the termination process effectively. The HR can rest assured of a smooth and compliant employee termination process when they have Cflow as their automation partner. Try Cflow for free by signing up today. 

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