How to Dismiss an Employee: A Simple Guide to Handling Employee Termination

<div class="grey-callout"><h2>In This Guide You’ll Learn</h2><p><ul><li>When you need to dismiss an employee.</li><li>My Five-Step Turnaround Process for improving an employee’s performance in advance of possible dismissal.</li><li>How to protect your business after you’ve dismissed someone.</li></ul></p></div>

You may need to dismiss an employee for gross misconduct or because they’re performing poorly. Whatever the reason, it’s important to conduct the dismissal process carefully and correctly.

Gross Misconduct

• This covers situations in which an employee is immediately dismissed because of a serious breach of company policy or the law. These include theft, violence, harassment, gross insubordination and being under the influence of drugs or alcohol while at work.
• You need to ensure that you follow your written policies in these cases.
• The dismissal process will likely involve doing an investigation into the incident, holding a meeting in which the employee is given the chance to give their side of the story and the employee appealing their dismissal if they have this right.

Poor Performers and the Five-Step Turnaround Process

It’s usually best to dismiss Poor Performers. They hold back other staff members and make it harder for organisations to thrive. Sometimes you may first want to try to improve the situation. I recommend a three-month “turnaround process” – a sequence of five steps designed to help quickly improve the employee’s performance, then go ahead with dismissal if still necessary. Here are the steps:

Step 1: Identify where the employee has fallen short

• Review the Great Performance Profile and score the employee for each competency. See where they’ve fallen below Minimum Acceptable Standards.
• Are there other reasons why they haven’t come up to scratch that aren’t contained in the Great Performance Profile, such as their general attitude?
• Were the Minimum Acceptable Standards properly understood by the employee?
• Is the Great Performance Profile realistic? Does it need to be modified (at least for future recruitment)?
• In hindsight were there signs of problems which were not thoroughly explored during recruitment of the employee? Did the employee oversell themselves? Did your organisation?

Step 2: Conduct performance reviews

• Hold weekly performance reviews in which you track how the employee is doing.
• Make sure the employee understands what’s expected by getting them to state the objectives of their job.

Step 3: Issue a warning

• Give the employee a verbal or written warning stating that if they don’t meet Minimum Acceptable Standards within a certain time then they will be dismissed.

Step 4: Do a sanity check

• Before dismissing the employee, consider whether they might perform acceptably in another job.
• Could you outsource or automate the job? Could existing employees take on the responsibilities?

Step 5: Dismissal

• If the employee’s performance hasn’t improved after three months, then if it’s legally possible, take steps to dismiss them.
• Hold a meeting with the employee and tell them quickly and clearly that they’re being let go. Be respectful and humane. It’s a good idea to have another director or someone from HR present.
• This should never come as a surprise to the staff member because you should have been communicating clearly with them throughout the process about whether their performance is meeting expectations.
• Remind them of any restrictive covenants in their employment contract.
• Put the employee on gardening leave so that the team can move on and you remove the potential for a bad atmosphere in the workplace.
• Hold an Exit Interview even though you've dismissed them. It often provides great feedback to improve the company's performance.

Recruitment Agency Guarantees

• I’m not a fan of recruitment agencies but one of their advantages is that if a new hire doesn’t work out within some time period you may get a refund or a replacement.
• Under a refund you’ll be paid back some percentage of agency fees, often in the form of a time-limited credit note.
• With a replacement guarantee the agency sends you a new person. The disadvantage of this is that you won’t necessarily receive a similar candidate and it may take time for the agency to find someone.

What to Do After You’ve Dismissed an Employee

Reassure your existing staff

• Your staff may feel happy, indifferent, sad or angry about the dismissal of their colleague. The dismissal may have raised issues in their minds about the company and their future in it. They may start to think about other options.
• To avoid losing good staff, you need to show that you appreciate them. Make sure that you deal swiftly with any feedback to do with management and the treatment of staff that came up at the Exit Interview.

Pause and reflect

• Before hiring again, you need to think about what went wrong.
• Try to identify underlying reasons rather than just symptoms. Perhaps the job didn’t create value for customers, the Great Performance Profile wasn’t realistic or the recruitment process wasn’t sufficiently rigorous.
• Think about lessons to be learned to improve things for next time.

<div class="grey-callout"><h2>Key Takeaways</h2><p><ul><li>In situations of gross misconduct, dismiss the employee immediately according to your company policies.</li><li>It’s best to dismiss Poor Performers because they hurt company performance.</li><li>Before you dismiss a Poor Performer carry out my Five-Step Turnaround Process to see if you can get them to improve.</li><li>If they don’t improve, move forward with dismissal.</li><li>If the dismissed employee came through a recruitment agency, you may be eligible for a refund.</li><li>After you dismiss someone, you need to reassure your existing staff and deal with any underlying problems that may lead them to question their position in your organisation.</li><li>Before hiring again, reflect on what went wrong so that you can improve for next time.</li></ul></p></div>