If an employee doesn’t have a writ­ten con­tract (this is dif­fer­ent from an offer let­ter), then the employee is at will. This means the employee can quit for no rea­son at all or what­ever rea­son he or she wants. The employer can fire the employee for no rea­son or what­ever rea­son he or she wants, except for the fol­low­ing areas which are a basis for a wrong­ful dis­charge claim:

  • Ille­gal rea­sons such as discrimination
  • Pub­lic pol­icy vio­la­tions includ­ing retal­i­a­tion against an employee who refused to do some­thing ille­gal, who exer­cised their legal rights such as vot­ing, or who blew the whistle
  • Oral promises such as a promise of job security
  • Breach of the covenant of good faith and fair deal­ing such as fir­ing some­one right before their retire­ment vests

You should have a well thought out, doc­u­mented, and legit­i­mate busi­ness rea­son for ter­mi­nat­ing an employee to pro­tect your­self against a wrong­ful dis­charge claim. You’re typ­i­cally free to lay off an employee if your busi­ness requires a reduc­tion in force (there are spe­cial require­ments for employ­ers with more than 100 employ­ees). Other law­ful rea­sons include poor per­for­mance, insub­or­di­na­tion, exces­sive absences, dis­hon­esty, crim­i­nal activ­ity, using drugs or alco­hol at work, dis­clos­ing trade secrets, etc.

Before you ter­mi­nate your employee, you should make sure you haven’t made any oral promises of longevity, you don’t have a writ­ten con­tract with the employee stat­ing an employ­ment term, or pro­vi­sions in your employee hand­book mak­ing promises of job secu­rity. You should also make sure there isn’t a whiff of dis­crim­i­na­tion or any other ille­gal rea­son in the deci­sion. You should also check your employee hand­book to make sure you fol­low procedures.

If the deci­sion is based on an alle­ga­tion such as sex­ual harass­ment, make sure that the deci­sion to ter­mi­nate is based on a well-documented and com­plete inves­ti­ga­tion with fac­tual con­clu­sions. You may also con­sider alter­na­tives to ter­mi­na­tion such as reas­sign­ment, coun­sel­ing, allow­ing the employee to look for a new job dur­ing work hours, etc.

You may want to con­sider offer­ing a sev­er­ance pack­age to your employee. You don’t have to give a sev­er­ance unless you agreed to pro­vide sev­er­ance in an employ­ment con­tract or employee hand­book. Nor­mally the sev­er­ance is com­men­su­rate with the dura­tion of employ­ment. You should make the sev­er­ance con­di­tional on the employee sign­ing a release of all legal claims. There are spe­cial require­ments for releases signed by employ­ees who are 40 years old or older. You may also con­sider allow­ing the employee to resign, offer to make a favor­able ref­er­ence, or help the employee find a new job.

Before the ter­mi­na­tion meet­ing make a list of all the com­pany prop­erty that the employee is to return. You may also want to enlist IT to make sure that the employee doesn’t delete or take emails and other elec­tronic data. This should be done con­sis­tent with your policies.

Meet with the employee in pri­vate with another man­ager. State the rea­sons for ter­mi­na­tion, explain the ben­e­fits and sev­er­ance, if any, and let the employee respond. Then just lis­ten. Don’t argue. Allow a day or two to clear out belong­ings and to say good­bye, unless the employee is likely to be a men­ace. You may include a ter­mi­na­tion let­ter and pro­vide it to the employee at this meet­ing. You may also want to remind the employee about their con­fi­den­tial­ity and non-compete oblig­a­tions. Make sure that you give the employee the final pay­check, ben­e­fits, and pro­vide a COBRA notice. You must pay the final pay­check within three days if you ter­mi­nate the employee or at the next reg­u­lar pay day if the employee quits.