Practical Tips for Terminating Accounting Firm Employees
Any time an employer terminates an individual, the possibility of legal action increases for the employer.
In the United States, we follow the “employment at will” doctrine, which means either the employer or employee may terminate employment at any time, without notice, for any reason not prohibited by federal or state law. The doctrine applies only when there is not a written or implied contract between the two specifying the length of employment.
I mention the word implied because employers may alter the existing “at will” relationship by adding wording in their handbook or implying termination would only be for “just cause.” Termination for “just cause” means involuntary termination may only be for violation of company policy. Legislation at the state and federal level has increasingly created exceptions to this doctrine, opening the door for employees to challenge involuntary terminations.
There are many reasons why an employer could consider terminating an employee. We will not discuss those reasons here. However, in any of these cases, there are certain best practices the employer can follow to ensure the termination is done properly; after all, terminations require planning to minimize the legal risk of a termination done improperly. For example, including key members of the company’s HR department is a must; management must be trained on how the process of terminating an employee is conducted.
The risk of being named as a defendant in a lawsuit exists not only for the employer, but also for the manager involved in the decision and sometimes even for co-workers. The manager should consult with HR prior to firing the employee to review the underlying reasons for termination and ensure proper documentation is in the individual’s file.
It is not uncommon for a manager to want to fire an employee for unsatisfactory performance; however, what happens when the documentation in the file shows the individual’s performance has been satisfactory? If an employee is not performing, personnel files should contain documentation of performance evaluations indicating that performance is below standard. If the manager’s decision to fire an employee is not based on performance, but, instead, on unacceptable behavior, make sure enough facts have been gathered through an HR investigation to support the decision to terminate.
Terminations should be planned and documented in advance of the moment of termination. It should be executed by the manager with an HR representative and conducted in a respectful, courteous manner. Decide who will be doing the speaking. If the manager will be handling the termination, he/she should be prepared with a short statement informing the individual the decision has been made to terminate his/her employment at the company.
Give a short and concise explanation as to the reason and the facts behind the decision. Inform the employee of the effective date of termination, which should be the same day as the meeting. It is a good idea at this time to remind the employee of any documents such as confidentiality, non-compete and/or non-solicitation agreements the person signed when he or she joined the company. Review the benefits package and COBRA information and inform the person of any severance package or additional pay he or she will receive. By law, you must either hand the employee their final paycheck or, depending on the state where your office is located, there are a maximum number of working days within which their last paycheck must be provided.
Once the termination meeting has concluded, the employee should be told what will happen next. Both employee and manager or the HR representative need to walk out of the meeting, together, with the terminated employee to his/her desk location to collect his or her belongings and then escorted out of the building. Prior to the beginning of the termination meeting, the IT Department should be notified to block computer access, change pass codes and take all necessary security measures to terminate the employee.
Upon terminating an individual, employers should consider sending out a short message to the organization notifying everyone that the employee is no longer with the company. This type of communication is necessary to inform those who worked with the departing employee of the termination. Please treat the termination of an individual respectfully and professionally. All remaining employees would expect the same courtesy and respect if terminated.
You will reduce the risk of a lawsuit when you fire an employee if you have the right documentation in place, apply the rules evenly and consistently, and if you don’t fire employees for reasons prohibited by federal or state law.
Author’s note: This article should not be construed as legal advice. Include your HR department and consult with legal counsel anytime you are considering terminating an employee.