Top 9 Ways to Terminate an Employee Without Legal Ramifications

Terminating an employee is never easy, but sometimes situations go beyond your control. They may not show improvement in their performance despite repeated assistance or become hostile. In such cases, lawfully terminating the employee is the only logical solution.

It is never easy to fire an employee, especially after you have spent considerable time and resources in hiring and training the employee for the job. However, sometimes, circumstances become unavoidable, and you have to take the drastic step of terminating employees.

Irrespective of your experience with them, when it comes to terminating employees, make sure you do it the right way and the legal way to avoid any court issues or legal troubles later. Therefore, let us check out how to fire employees the right way legally.

Provide an employee handbook at the start.

The employee handbook establishes proper disciplinary policies and communicates them equally to every employee. This document could offer you legal protection if any employee happens to take you to court later. These disciplinary policies could also serve the grounds for terminating employees.

The employee handbook should be printed in a hard copy and given to new hires on their day of joining. You need to ask them to sign the document as proof that they have read, understood, acknowledged and agreed to the disciplinary policies laid down by the company. You could also take this from your employees in writing and offer them to keep the handbook for their reference. You can certainly seek legal assistance to ensure that the policies are specifically created for your company and comply with the regulations.

Document any company violations.

If an employee violates the company policy or is consistently low on performance, then a mere conversion is just not enough. You should ensure that the issues are presented in a documented form to the employee and a written acknowledgement should be sought from the employee.

Nowadays, things can be done over email. But we recommend that the employee should appropriately sign the physical documentation, and it should be preserved in the personal file of the employee. Undocumented issues that lead up to terminating employees are a minefield of expensive ligations resulting in costly settlements.

Investigate before terminating employees.

The time you start to think of dismissing an employee is when you need to initiate a thorough investigation that would form the foundation for the employee termination procedure. It must cover, documented interviews of co-workers and supervisors, and review of any sensitive email or computer files. All evidence must be preserved during the period of investigation to avoid any allegations of tampering or its obliteration.

Refer to the agreement of employment.

A comprehensively drafted employee agreement made with the help of a lawyer specialising in labour law will contain all the necessary provisions to allow you to fire employees. It will contain all the procedures that the company has to follow during employee termination. The notice period in the agreement should be followed, plus, the severance pay as detailed in the agreement should be compensated to the employee.

Terminate with dignity.

After putting the employee on a notice period, if the employee still fails to show any signs of improvement, then it is time for you to end the association with the employee. Now, when you do it, make sure you do it professionally and with dignity. Let things end on a positive note despite the previous circumstances. To begin with, terminating employees, especially termination of employment during the probationary period should always be done in private with another employee or management as a witness. It allows you to show a more professional behaviour towards termination and end things calmly without creating a storm.

Serve notice.

Don’t terminate an employee without any warning. The employer must serve a notice of 30 days to 90 days before terminating employees. The notice should be provided in writing and must mention the cause for terminating the employee. The employee may move to court against the employer if the employer fails to provide a timely and proper notice period to the employee before their termination.

Provide severance pay.

The severance pay is referred to as the final compensation package paid to the employee as a monetary benefit after the resignation on a collective agreement, layoff, retirement, or for any other reason for the employee to leave the company excluding dismissal by misconduct.

The employee has to be paid a minimum of one-month salary if they have completed a minimum of one year of continuous service before their termination. In cases involving mass termination or layoffs in factories, plantations or mines with more than 100 employees, the company must provide a minimum of three months of salary to the employees who are to be fired.

According to the Payment of Gratuity Act 1972, the worker or employee is entitled to receive a gratuity payment from the employer on their termination from service, if they have completed five years of continuous service with the company. As per the Industrial Disputes Act 1947, retrenched employees are entitled to a minimum of 15 days salary for every year of employment with the company.

Stay away from constructive dismissal.

When the employer creates a situation, wherein the employee is forced to leave the job not out of their own will but does so due to the conduct of the employer, it is referred to as constructive dismissal. This resignation can be due to changes in the terms of employment or exposure to bad working conditions, leaving no other option for the employee but to resign.

Factors that could lead to constructive dismissal include:

  • A demotion
  • Unexplained salary reduction
  • Transfer to a lower position
  • Humiliation or harassment by the employer
  • Indirect termination threats
  • The offer of early retirement

Conduct exit interview.

Conducting an exit interview with the employee who has resigned or has been fired can prove to be beneficial for the company. Comprehensive exit interviews disclose crucial information related to the organisation. They will help you modify, make changes or improve the work environment, management, culture, even the overall development of the organisation.

Terminating employees is never easy, but sometimes situations go beyond your control. For instance, employees don’t show improvement in their performance despite receiving repeated assistance from the company or the employee has become hostile. In these cases, dismissing the employee seems like the only logical option. Therefore, take the necessary steps to initiate the termination procedure lawfully.

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