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How to Fire an Employee

A Guide to Employee Termination

Last Updated: April 11, 2024

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Key Takeaways:

  • Avoid a wrongful dismissal case by following state labor laws and keeping documentation in support of the termination.
  • Strike a balance between compassion and firmness – you want your employee to feel respected and heard while still maintaining your position.
  • Consider how a dismissal might affect the work environment, company finances, and customer relationships.

At some point, every manager or business owner will have to face up against a tough decision: Is it time to let an employee go?
Maybe it’s a financial issue, maybe it’s about performance and conduct. Either way, firing an employee is one of the hardest parts of being a boss. Not only is it an emotional challenge that can cause conflict in the workplace, it’s also a legal issue that can be difficult to navigate.
To gracefully fire an employee, you’ll need to know what counts as grounds for termination, what to say to your employee when you let them go, and how the dismissal can affect the rest of your company.

What should I know before letting someone go?

It’s something any manager dreads: a dismissal ending up as a court case. An employee can sue your company for wrongful termination if they find that the dismissal was based on unlawful grounds. This can happen if you breach the Employment Contract or fire someone with unjust cause.
To avoid a potential lawsuit, you need to know what you legally can and can’t fire someone for. Here are some protected traits that are not grounds for termination:
  • Race or color
  • Religion
  • National origin or ancestry
  • Physical disability
  • Mental disability or medical condition
  • Marital status
  • Gender or sexual orientation
  • Age
  • Pregnancy and childbirth
Firing an employee for any of these reasons counts as discrimination according to Title VII of the Civil Rights Act of 1964, the Age Discrimination Act of 1967, or the Americans with Disabilities Act of 1990. You’re also not allowed to fire an employee as retaliation.

How can I avoid a wrongful dismissal case?

To avoid a wrongful dismissal case, you should have documentation backing your decision to fire an employee. Use Employment Warning Letters to formally record a staff member’s poor performance or breach of company rules.
Warning letters let the employee know that dismissal might happen if they don’t improve their behavior. This way, a termination won’t come as a surprise. And if a dispute happens, the letters will prove that the issue has been persistent and that you made attempts to correct the behavior.
There are cases in which you don’t have to warn the employee in advance. Some causes for dismissal are obvious, such as if the employee breaks any part of the Employment Contract or engages in illegal behavior on company time or property.
Fireable offenses can include:
  • Theft or misuse of company property
  • Violation of company policies
  • Excessive absenteeism
  • Insubordination
  • Drug or alcohol intoxication at work
  • Violence or threats
  • Gross misconduct
Because all states except Montana allow “at will” employment, employers and employees can often end the employment at any time for legal reasons.

Rules and regulations vary from state to state.

Seek guidance from the State Labor Offices to learn about the labor laws specific to your region and industry.

At-will exceptions

There are exceptions to at-will employment. If your employee is working under contract or has a union membership, there might be limits to how and why you can let them go.
For example, the contracts you or your organization signed could contain terms about reasons or procedures for termination.
  • For employees working under contract, read the original contract they signed to make sure you’re not violating the agreement.
  • If the employee is a member of a union, read the agreement your business has with the union to find what conditions the employee can be terminated under and what procedures you’ll need to follow.
  • Employees who are independent contractors (1099 employees) can be terminated in accordance with the terms and conditions of their contract.
Employees vs. Independent Contractors
Not sure what the difference between employees and independent contractors is?
Employees and independent contractors have distinct roles, responsibilities, and obligations to businesses and clients. Read our article to find out what separates them.

What paperwork do I need to legally terminate an employee?

Proper employee paperwork can make the dismissal process easier while helping you avoid unwanted situations.
In addition to Employment Warning Letters, you should use an Employment Termination Letter to finalize the termination. The letter will include details about the employee’s final pay, health benefits, and severance, in addition to the reasoning for the termination. It can also contain additional terms and conditions, such as confidentiality or return of company property clauses.
Some businesses have employees sign a Non-Compete Agreement when they enter into the company. With this, you can deter your employees from using knowledge of your business to compete against you.
You might also ask an employee to sign a Non-Disclosure Agreement at some point during their employment. This helps ensure that any sensitive or confidential information won’t be shared or misused.

What are the steps for firing an employee?

Firing an employee with grace is a demanding task. You’ll need to plan ahead, get all the paperwork in order, maintain a gentle but firm facade, and say only what’s needed.

Before the dismissal

  1. Inform IT. Let them know when you’re speaking with the employee so they can remove the employee’s digital permissions during your meeting.
  2. Ask someone to escort the employee out after the termination. This is for everyone’s security; even if you don’t think the employee will act out, it should be standard procedure.
  3. Prepare the paperwork, such as an Employment Termination Letter and any internal documents you might need.
  4. Prepare emotionally. Letting an employee go can be stressful. Plan out what you’ll say during the meeting and have strategies for how you can keep the conversation calm.
  5. Don’t inform the employee far ahead of time. Instead, bring them directly to the meeting to avoid unnecessary stress or anxiety.

During the dismissal

  1. Meet in a private office or meeting room. The meeting should be kept as confidential and private as possible.
  2. Treat the employee with respect. Being fired is hard, and while you need to be firm about their dismissal, you can offer them compassion for what they’re going through.
  3. Have a witness present. Try to have someone from HR be in the room with you, so they can support you if something goes wrong or be an eyewitness if there’s a dispute later on.
  4. Discuss the dismissal. Give the employee the Termination Letter and explain the situation. You should be prepared for the possibility the employee will be upset. Keeping tissues and water in the room can help them feel comfortable.
  5. If you’re concerned about the dismissal going badly, you can record the meeting. Be sure to inform the employee and check the local privacy laws for consent. While it might not be allowed as evidence for a court case, it can be helpful to have proof of what exactly was said.

After the dismissal

  1. Inform the other employees. You’ll have to walk the line between too much and too little information, as both can have negative effects. Be sure not to divulge personal information by keeping it short and to the point.
  2. Divide the labor of the fired employee between team members. Ask IT to forward their calls and emails to someone so information doesn’t get lost.
  3. Follow up with IT, payroll, and HR to ensure that everything went well and that the final paycheque is processed.
  4. Post the now-open position, if applicable.

What to say to fire an employee

The key to respectfully letting an employee go is to be brief and to the point. A direct and fact-based conversation gives a clean break, letting your employee leave with dignity.
  • Offer your employee compassion without giving them false hope about keeping their job. Make it clear that this is a final decision, wish them the best in the future, and let them turn to their friends and family for support.
  • Avoid small talk and personal statements – don’t make the conversation about you. Your employee doesn’t need to know that this is a difficult situation for you too.
  • There’s no need to go into detail about the reasons for the dismissal if the employee has already received warnings about their behavior. Simply refer to the warning letters they received. If this is an at-will termination, you don’t have to give a reason.
  • Discuss the logistics of the dismissal. Mention when your employee’s final paycheque will be sent out, when their benefits will end, and how they will go about retrieving their personal items.
  • Ask them to return any company property they have in their possession or custody, such as keys, equipment, and ID cards.
  • End the meeting on an upward note, if possible. One way to do this is to express how the dismissal is an opportunity for the employee to find something better suited to them. Depending on the reason for the termination and your relationship with the employee, you can offer to write them a reference letter.

Example scripts

Here are some suggestions on how to dismiss employees for various reasons. Scripts can be helpful, but you should always consider the unique situation of the employee – there’s no one-size-fits-all solution when it comes to termination.
For a dismissal with cause and previous warnings
If you've already warned the employee that their behavior could be cause for dismissal, they know the consequences for not improving. By referring to the warning letters they have received, you can remind them that the termination shouldn't come as a surprise.

''Hello, Brian. As you know, we’ve had previous meetings concerning your attendance and tardiness. The warning letters you received in those meetings informed you of how you could improve your conduct. Unfortunately, since we haven’t seen an improvement, we are letting you go. Today is your last day with the company.

Your final check will be deposited on the next payday, and your insurance coverage will last until the end of the month. Please leave your keys, company ID, and all company equipment with me, and collect all your personal belongings before you leave.

You can contact me or HR if you have any questions. I hope you’ll be able to find a position that suits you better in the future, and I wish you the best of luck.''

For a dismissal without cause (at-will termination)
When there's no reason for the dismissal, you can state that it is an at-will termination. If you and the employee have a good relationship and you think it'll be received well, you could offer to write them a reference letter.

''Thank you so much for meeting with me, Jeanne. Unfortunately, I have some bad news: We have decided to let you go. This is an at-will termination, and today is your last day with the company.

I have your final cheque right here. Please leave your keys and all company property on your desk and collect your personal belongings before you leave.

You can contact me or HR if you have any questions, and I’d be happy to offer you a reference letter. It’s been a pleasure to work with you, and I wish you all the best.''

For a dismissal with cause and no previous warnings
In the case of a severe breach of contract or company policy, you can fire an employee with immediate effect. It's a good idea to explain the reason for the dismissal without referring to specific incidences.

''Alex, today is your last day with the company. As you know, we have a zero-tolerance policy for violence in the workplace.

This is clearly stated in the company guidelines you signed on your first day with us, and you’re aware of the consequences.

You’re dismissed, action immediately. Please leave your key fob with me and collect your belongings. Your severance and final paycheque will be mailed to you, and your insurance coverage will last out this week.

As per company guidelines, security will see you out. This isn’t a personal thing, but something we do for everyone. I hope you understand.

Best of luck in your future endeavors.''

Can I fire an employee by phone or email?

The short answer is that you shouldn’t. While firing an employee by phone, text, or email is technically possible, it’s also impersonal and disrespectful. An in-person meeting will benefit both you and the employee.
The longer answer is that there are cases where you will have to fire an employee without seeing them face-to-face. A 2023 study showed that at least 14% of the U.S. workforce has permanent remote jobs, and this will most likely continue to increase. While some remote workers would be able to come into the office for a meeting, the travel might be too costly for others.
When letting a remote employee go, the best course of action is to have the conversation over a two-way audio-video call. This way, you can show the employee that you value and respect them, and you can make sure that your communication is clear with no room for misunderstandings.

How does firing an employee affect my workplace?

Any dismissal can affect the rest of your company and other employees. From finances and productivity to stress and insecurity in the workplace, the outcome will reveal whether the dismissal was a good move.
A termination can:
  • Affect the work environment. Your staff will be grateful if you fire someone who is causing discontent in the workplace. On the other hand, dismissing a well-liked employee can lead to resentment.
  • Impact your business’ finances. Replacing an employee could cost your company up to four times the position’s salary. At the same time, dismissing an underperforming worker can save you money in the long run and improve your business’s bottom line.
  • Cause stress and insecurity in the workplace. Members of your staff might be nervous that they are next in line to be fired. While you can try to assuage their fears, any dismissal is bound to cause a certain level of upheaval in the workplace.
  • Harm customer relationships. Your employee might be in the middle of a project or have built strong working relationships with some of your clients, and letting them go might impact how your client views your company and reliability. While you can try to replace the employee, there’s no guarantee that the relationship can be recovered.
  • Improve workplace safety. Letting go of a reckless or careless employee can lower the risk of a serious workplace accident taking place. This, in turn, will save you money on safety, sick time, and replacing labor or property.

Firing an employee legally and respectfully

A dismissal doesn’t have to be a nightmare. By planning ahead, complying with labor laws, and being factual and firm, you can make the situation respectful and straightforward.
While letting someone go might always feel a bit uncomfortable, it can help you, your company, and your employees change for the better.
Termination is a tool like any other, and by knowing how and when to apply it, you can let your business flourish.