This is part of a “hands on guide” to assist you in the legal discipline and discharge of employees as presented by Fort Wayne Business Attorney Loren Allison, covering the following topics & more! Download your copy by clicking here (PDF)
THE MEETING—METHOD OF TERMINATION
- Make it confidential;
- Get to the point. If you are about to fire an employee, then there is no need to make small talk. The meeting will probably be tense anyway, and attempts to make it appear casual will serve only to increase the tension. By focusing on the individual and the circumstances that have brought about the dismissal, you will be speaking honestly and helpfully.
- Be specific about the reason. If the reason is unsatisfactory performance, say so, and provide specific examples and details. Discussing problems outside of the job’s scope serves no useful purpose; and
- Refrain from suggesting self-improvement. The moment of firing is not a time to suggest methods for acquiring or improving skills, etc. The truth should be expressed, but in a way that permits the person to think as positively as possible. The terminated employee has a lot to think about with getting a search underway in seeking other employment.
Items To Be Covered
- The employee should be told, to the degree possible, exactly why he/ she is being terminated. Do not try to “soften or increase the blow” by giving the employee a pretextual reason for termination; this will only make things more difficult at trial/arbitration when the employer wishes to give its entire business justification;
- Give the employee his or her final paycheck. Also, have information available for the employee concerning benefit conversions, unemployment insurance, vested stock option if applicable, and other information concerning vested benefits;
- Be sure during this termination interview that you collect any property which belongs to the company. A property checklist, signed by both the employee and interviewer, is useful; and
- In a voluntary termination, it is equally important to conduct exit interviews of employees leaving the organization. Some “voluntary” terminations are not voluntary at all, and you may find yourself with a “constructive discharge” lawsuit after the person has quit. In a constructive discharge situation, the employee alleges that work conditions were so intolerable, for sexual harassment reasons perhaps, that he/ she was forced to quit.
It is possible during a well conducted interview to discover that the employee’s stated reasons for leaving the company are not the real reasons. Frequently, an employee who has been sexually harassed or has suffered other forms of discrimination may choose to leave rather than deal with the problem. This may come out in the exit interview.
If the employee indicates that it is because of alleged mistreatment that he/ she is leaving, the reviewer should get as many specific details as possible and ask the employee to delay the resignation. An immediate investigation should be conducted, and the employer should either remedy the situation, if the employee’s contentions are true, or establish that the employee’s contentions have no merit.
In certain non-routine discharges, where it is probable that the employee will file suit, a termination agreement or release should be considered. When viewing this, you must consider the key question of whether settlement might be less costly than a lawsuit. Apply a balancing test! A release or termination agreement can be especially appropriate where documentation is less than adequate and/or the employee’s retention presents serious morale or performance problems.
It is sometimes preferable that a termination agreement not contain a release since this type of agreement will be less apt to alert the employee to potential litigation. However, if a release is to be included in the termination agreement, the release must be knowing and voluntary. The employee must understand what he/ she is releasing and must enter into the agreement voluntarily. It is undesirable to present an employee with such an agreement and demand that the employee sign it at that meeting; an employee might well execute the agreement and later claim that it was not voluntary.
A ‘parachute agreement” is a written employment agreement that is designed to protect an employee in the event of a corporate change in control. It provides benefits to the employee if the change in control results in termination or has some other impact on employment, such as a change in duties, work location, or recording responsibilities. “Golden parachutes” are provided for executives, and “tin parachutes” for lower-level employees; the main difference being the greater benefits provided by the former.
A frequent cause of litigation is the terminated employee’s inability to secure employment. A job cuts off liability for backpay and mitigates jury sympathy. Juries tend to look forward and help those who need it. Outplacement, therefore, can be a relatively inexpensive method of protecting yourself by mitigating the bitterness of the termination. If a service is selected, you should pay for the service directly to ensure that the employee avails himself of the program.
Some grievance/arbitration provisions permit the parties to mutually waive the steps of the grievance procedure and proceed directly to a higher step, or sometimes directly to arbitration. However, this should only be done in an important/controversial case because many grievances simply, “wither on the vine” as they proceed through the various steps of the procedure.
Grievance meetings should be utilized by an employer to narrow the issues and focus on the areas of dispute. Detailed notes of what transpires at grievance meetings should be made and retained for use at a later time. Use these meetings as your deposition/fact-finding conferences-not to argue or debate.
Formal settlements usually involve the execution of some type of document disposing of the grievance and stating the basis upon which the grievance is being disposed. Execution of the grievance settlement should involve the grievant waiving any and all claims arising out of the matter being grieved, in an effort to foreclose any future procedure arising out of the same incident. Moreover, a formal settlement of grievance issues has the appearance of being “above board,” which is also an advantage. Finally, under certain circumstances, it may be important to specify the settlement of a particular grievance is “without precedent/prejudice,” meaning that settlement shall not be construed as precedent for future cases of a similar nature.
Article by Loren K. Allison, attorney at law
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