8.13 Employee Separations and Terminations
Employee separation can occur in any of these scenarios:
- The employee resigns and decides to leave the organization.
- The employee is terminated for one or more of the performance issues listed previously.
- Absconding is when the employee leaves the organization without resigning and following the normal process. For example, if an employee simply stops showing up to work without notifying anyone of their departure, this would be considered absconding. Employee separation costs can be expensive.
Resignation
Resignation means the employee chooses to leave the organization. First, if an employee resigns, they will normally provide the manager with a formal resignation written notification, such as a letter or email. Then the HR professional usually schedules an exit interview, which can consist of an informal, confidential discussion as to why the employee is leaving the organization. If HR thinks the issue or reasons for leaving can be fixed, he or she may discuss with the manager whether the resignation will be accepted. Assuming the resignation is accepted, the employee will work with the manager to determine a plan for his or her workload. Some managers may prefer the employee leave right away and will redistribute the workload. For some jobs, it may make sense for the employee to finish the current project and then depart. This will vary from job to job, but two weeks’ notice is normally the standard time for resignations.
Termination
If it is determined that an employee should be terminated, different steps would be taken than in a resignation situation. First, documentation is necessary, which should have occurred in the progressive discipline process. Performance appraisals, performance improvement plans, and any other performance warnings the employee received should be readily available before meeting with the employee. It should be noted that the reliability and validity of performance appraisals should be checked before dismissing an employee based upon them. Questionable performance appraisals come from the real-world conditions common to rating situations, particularly because of limitations in the abilities of the raters (Weekley & Gier, 1989).
Remember that if the discipline process is followed as previously outlined, a termination for nonperformance should never be a surprise to an employee. Normally, the manager and HR manager would meet with the employee to deliver the news. It should be delivered with compassion, but be direct and to the point. Depending on previous contracts, the employee may be entitled to a severance package. A severance package can include pay, benefits, or other compensation for which an employee is entitled when they leave the organization. The purpose of a severance plan is to assist the employee while he or she seeks other employment. The HR professional normally develops this type of package in conjunction with the manager. Some considerations in developing a severance package (preferably before anyone is terminated) might include the following:
- How the severance will be paid (i.e., lump sum or in x equal increments)
- Which situations will pay a severance package and which will not? For example, if an employee is terminated for violation of a sexual harassment policy, is a severance still paid?
- A formula for how severance will be paid, based on work group, years with the organization, etc.
- Legal documents, such as legal releases and noncompete agreements
- How accrued vacation and/or sick leave will be paid, if at all
Abscondment
The last topic that we should discuss in this section is the case of an absconded employee. If an employee stops showing up to work, a good effort to contact this person should be the first priority. If, after three days, this person has not been reachable and has not contacted the company, it would be prudent to cease payment and seek legal assistance to recover any company property they may have, such as laptops or parking passes.
Sometimes, rather than dealing with individual performance issues and/or terminations, we find ourselves having to perform layoffs of several to hundreds of employees. Let us address your role in this process next.
Rightsizing and Layoffs
Rightsizing refers to the process of reducing the total size of employees to ultimately save on costs. Downsizing ultimately means the same thing as rightsizing, but the usage of the word has changed, in that rightsizing seems to better define the organization’s goals, which would be to reduce staff to save money, or rightsize. When a company decides to rightsize and, ultimately, engage in layoffs, some aspects should be considered.
First, is the downturn temporary? There is nothing worse than laying people off, only to find that as business increases, you need to hire again. Second, has the organization looked at other ways to cut expenses? Perhaps cutting expenses in other areas would be advisable before choosing to lay people off. Finally, consideration should be given to offering temporary sabbaticals, voluntary retirement, or changing from a full-time to a part-time position. Some employees may even be willing to take a temporary pay cut to reduce costs. Organizations find they can still keep good people by looking at some alternatives that may work for the employee and the organization, even on a temporary basis.
If the company has decided the only way to reduce costs is to cut full-time employees, this is often where HR should be directly involved to ensure legal and ethical guidelines are met. Articulating the reasons for layoffs and establishing a formalized approach to layoffs is the first consideration. Before it is decided who should get cut, criteria should be developed on how these decisions will be made. Similar to how selection criteria might be developed, the development of criteria that determine which jobs will be cut makes the process of cutting more fair, albeit still difficult. Establishing the criteria ahead of time can also help avoid managers’ trying to “save” certain people from their own departments. After the development of criteria, the next phase would be to sit down with management and decide who does or does not meet the criteria and who will be laid off. At this point, before the layoffs happen, it makes sense to discuss severance packages. Typically, when an employee accepts a severance package, they should also sign a form (the legal department can assist with this) that releases the organization from all future claims made by the employee.
After the criteria have been developed, people have been selected, and severance packages determined, it is key to have a solid communication plan as to how the layoffs will be announced. Usually, this involves an initial email to all employees, letting them know of impending layoffs. Speak with each employee separately, then announce which positions were eliminated. The important thing to remember during layoffs is to keep your employees’ dignity; they did not do anything wrong to lose their jobs—it was just a result of circumstances.
Steps in Processing Employee Separations
We have covered the various ways in which an employee leaves a company, including performance issues managed through the progressive discipline process, separations resulting from employee resignations, terminations, rightsizing, and layoffs. In all cases of employee separation, it is essential to follow a standardized process to ensure that employees are treated with respect and dignity.
When an employee resigns their employment voluntarily, the process of the last day of work is fairly straightforward. In most cases, employees finish their workday and leave the workplace without incident. The company may choose to accept the resignation with the notice period provided or ask the employee to leave earlier than their notice period.
There is no legislation in Ontario governing the amount of notice an employee is required to give; however, the best practice and standard is two weeks. Some companies may decide to ask an employee to leave prior to the end of their notice period due to the nature of their position, or the access they have to confidential information, or any number of other relevant reasons. In these cases, the employer is required to pay the notice period to the employee. In other words, if the employee gives the employer two weeks’ notice of resignation, and the employer determines that they want the employee to leave earlier than the end of the notice period, the balance of the notice period must be paid to the employee in full, including any outstanding monies such as vacation time, commissions, etc. It should be noted here that legislation requires employers to continue any extended health care benefits for the balance of the notice period, even if the employee is not working the notice period.
The recommended process that HR Professionals should consider when dismissing an employee for any reason other than resignation is:
- Review employment contracts and legal requirements; it must be ensured that the dismissal follows the employment contract and complies with the Ontario Employment Standards Act (ESA). If unsure if there are legal grounds to terminate an employee, an employment lawyer should be consulted.
- Review and prepare documentation to ensure and demonstrate that all opportunities to support the employee to improve their performance issues have been taken. This documentation should include previous formal warnings, the Performance Improvement Plan (PIP), and/or the Supervisor’s documentation related to the issues.
- Develop a plan that includes the location and time of the meeting. This should include an exit plan that avoids an audience when the employee leaves the facility. There should also be a plan to deactivate any access or confidential information they have (computer network access, email accounts, company phones, etc.). This plan may also include any supports available to the employee after the termination has taken place (i.e. the Employee Assistance Program or community resources).
- Prepare the necessary documents that the employee will need to leave the meeting with. This would include a termination letter. The letter describes the reason for termination or separation, the effective date, and details about any payouts of vacation and/or other benefits they will receive.
- Schedule the in-person meeting in a private location at the end of the day or first thing in the morning. Do not dismiss an employee partway through the day when colleagues are most likely to be around.
- Keep the meeting short. Be compassionate and professional. Explain the reason for the termination and the effective date. Essentially, review what is in the termination letter that will be given to the employee at the end of the meeting.
- Thank the employee for their contribution to the company.
- Allow them to leave with dignity. If appropriate (i.e. in a layoff situation), this can be done by allowing them to personally pack up their belongings and say goodbye to coworkers. If it is not appropriate for the employee to return to their desk to collect their personal belongings, ensure that someone gathers these items and brings them to the employee before they exit.
- Disconnect employee access immediately after the meeting to any electronic security doors, computers, etc.
- Communicate. After the employee has left the facility, management should inform colleagues that the employee is no longer employed by the company. This is typically done via a company-wide email message. Remember, maintaining the confidentiality of the reason why the employee has left the company is of the utmost importance.
- File the Record of Employment (ROE) with Service Canada within the legally required timelines, and ensure that the employee is paid their outstanding wages, vacation pay, commissions and any severance in compliance with the Employment Standards Act obligations.
It is important to recognize that terminating an employee can be an emotionally draining experience for the deliverers of the bad news and for the employee. Human Resources professionals are often involved in these meetings; it is important to schedule time following the termination meeting to take space for themselves. The same should be offered to anyone else who was a part of the dismissal meeting.
“8.12 Investigation of Performance Issues” from Human Resources Management – 3rd Edition by Debra Patterson is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.
