You’ve just terminated one of your employees. Now what?
In some respects, the termination meeting is the quickest part of the process: there’s a lot of paperwork that needs to be done.
As you disengage from the dismissed employee, there still are plenty of items to take care of – not only for the dismissed employee, but for other remaining employees and people outside your organization.
Your HR department will need to complete a Record of Employment (ROE), which the employee will need to qualify for unemployment benefits. This states when the employee started and when they were terminated as well as the reason for termination. By law, this must be provided to the employee no later than 5 days after the termination and there are strict penalties for employers who fail to file an ROE – $2,000 fine or up to 6 months imprisonment – so don’t skip this step!
Payroll will need to do a final reconciliation on wages, commissions (if applicable), vacation allowance, benefits and withholding taxes. Also, you should prepare a T4 for the employee and provide that to the him/her, while also filing with CRA. Should you have to pay out a settlement to the employee as a result of a negotiated claim, you also need to ensure this is properly recorded on the T4 and declared to CRA.
If the company has a pension plan, the pension administrator will need to provide a T2033 E form so the employee can either take the pension entitlement as a lump sum in cash or transfer it to a Locked-in RRSP. If the employee has sufficient service to be fully vested in the pension plan, the employee may opt to receive a company pension. This makes sense when the termination is due to a layoff.
Most insurance carriers allow employees to continue to participate in a health, dental and/or life insurance plan (though at a higher premium than they might have been paying as an employee). so you should have something from your carrier that outlines what options the employee has. COBRA (Consolidated Omnibus Budget Reconciliation Act ) exists in the US to enable employees to maintain health coverage while they are in transition.
Some employees may have been entitled to company equipment, such as a company car, phone, laptop/computer etc. Usually, the smaller items can be recovered while the employee collects his/her personal effects.
Of these, company-owned vehicles are probably the most difficult to recover – especially if the employee works outside the office. Since employees will use such vehicles as their primary mode of transport to and from work, if the employee works out of your main office, we suggest you have someone drive them home or arrange for (and pay for) a taxi to take them home. If the employee vehicle is away from your main office, contact your leasing company to determine how they wish to handle the return of the vehicle.
WORKING WITH AN OUTPLACEMENT COUNSELLOR
If you are using an outplacement counsellor, that person should be provided complete details on the employee’s exit package so the counsellor can go through it with the employee. You can also have someone from Human Resources sit in to help ensure all the employee’s questions can be answered.
This will allow the counsellor to explain the things that are probably topmost in the employee’s mind at this point: will I be paid? How much will I receive?, What happens to my benefits? How do I qualify for unemployment?
The counsellor is specially trained to assist the employee in handling the emotional impact of dismissal – whether it be grief or anger. Very few executives have such training or experience.
If you have agree to offer the employee an outplacement program as part of their severance package, the outplacement counsellor can explain to the employee what their options are and how to participate in the program. Most outplacement programs are modular and include such things as assessments, resume writing, networking and other job search skills. Often the program has some flexibility, so the counsellor can outline the options the employee can take – perhaps more resume support or interview coaching than the standard program – so the employee gets a program that matches his/her needs while also coming within the budget the employer has allowed for.
The outplacement counsellor will most likely suggest the employee take some time to review the company’s settlement proposal and suggest he/she have it reviewed by a lawyer to ensure it the employee’s rights have been addressed and to assess the fairness of the offer. Having a lawyer review the agreement is one of the employee’s fundamental rights: they do not have to immediately sign back on the company’s offer.
When one person is terminated, the office rumour mill will churn.
“Is this the first of many?” “Will I be next?” “What did Joe do?”
As soon as possible after the termination meeting, you should immediately have a staff meeting with those who need to know. Tell the staff briefly what happened and why so you can clear the air.
It’s important, once you have concluded the termination meeting, that you post an announcement so the entire office staff are informed of the employee’s departure and so that normal business routine is maintained. This actually is something you should have prepared in advance so you don’t lose time while trying to compose something. We recommend you do so using neutral language, otherwise the employee could have grounds to sue for defamation. Common phrases used are “… has left the company to pursue other interests” or “… has resigned from his/her position”. This allows the departing employee to save face with his/her peers while informing office staff the employee will no longer be part of the team.
The announcement should also specify how the functions of the employee should be handled internally. If the employee held a supervisory role, specify who the employee’s direct reports will report to. If you have a replacement selected, you can announce that.
Remember to brief your receptionist on what to say to outside personnel who call in asking for the terminated employee. He or she is the first contact most people outside your organization will encounter when they call or visit your office.
If the employee liaised with a number of people in other companies, it may be worth making a personal visit – or at the very least, a phone call – to each client, customer or partner to ensure continuity and to explain whom they should communicate with inside your company. If you have appointed a replacement/successor, then it is even more important to accompany them to meet with external contacts to help introduce them and pass the relationship on to them.
Consider having an auto-response email set up to inform people outside the organization that the employee they’ve sent an email to is no longer with the company. That’ll be much better than having incoming emails to that employee bounce and can be set up in advance so it can be activated during the termination meeting.
Usually, it’s best to have a staff member accompany the employee while he/she collects personal items from their office. This is to safeguard against an employee removing company documents or damaging company property. If the employee is especially trustworthy and professional, and the termination is more of a layoff than dismissal, you may want to consider allowing them to clean out their office without supervision. This shows trust in the employee and it will be noticed by other employees.
If the employee is comfortable with it, clean-up can be done immediately after the termination meeting. If the employee is concerned about image and/or privacy, make arrangements for the employee to come back in after hours, but ensure you have a staff member on hand to provide them access to the office and to supervise the collection and packing of personal items.
If you follow the guidelines we’ve presented here, you’ll be treating your employees fairly and significantly reducing your risk of being sued for wrongful dismissal. You’ll be helping your former employees move on so they can concentrate on finding their next opportunity. if the dismissed employee was a trouble-maker of under-performer, you might even see an improvement in morale among the remaining employees.
In this series, so far, we’ve discussed the process of terminating an employee in a professional manner. What if you’re thinking of leaving your current employer on your own volition?
There also is a professional way to quit, and we discuss that in the December issue of our newsletter, GRAY MATTERS. If you’d like to receive a copy, go to our CONTACT page and complete the form there.