How to fire an employee the right way: 7 tips

How to fire an employee the right way: 7 tips

Wil Chan
By Wil Chan
May 17, 2022
6 min read

If you’re an entrepreneur who employs people, you probably know firing employees is one of the hardest things you will ever have to do.

For a small business, where you and your employees often feel like family, having to fire someone is especially difficult.

No matter the reasons for it, an employee termination will be upsetting for everyone. It’s important to know how to keep the situation smooth and dignified. 

Here's our guide on how to make sure you handle this tough situation the right way:

1. Don’t let firing be a surprise

Firing is a process. When you fire someone properly, they should never be surprised.

If your company needs to downsize and do layoffs, it can be helpful for your staff to understand the position the company is in. This is much simpler with a small business where most employees will already understand the company’s financial situation. 

If you’re firing an employee for poor performance, you should be sure to give warnings and performance reviews ahead of time. 

You can put them on a performance improvement plan with regular evaluations. Give them a chance to improve, making firing them your last resort.

If you do decide to fire an employee, have documentation to back up your allegations. 

For example, if they’re consistently late handing in projects or have multiple unexplained absences, keep a list of every incidence. This will help remove the element of surprise and will cover your actions from a legal standpoint.

2. Follow company policy and the law

It’s beneficial to have policies in place that determine when and how to let an employee go. These will dictate why you can fire someone and the steps you must follow before doing so.

You don't need a big employee handbook as you get at larger companies. Your termination process just needs to be documented somewhere everyone can access — even if it's a single page.

Make sure you know about any state and federal laws that may apply to your situation. Certain things are not legal reasons to fire an employee over. Doing so could lead to a wrongful termination lawsuit.

It’s a good idea to draft a letter clearly stating the termination details, including the notice period and termination date. Consider running this past your business lawyer before handing it over.

3. Have a witness

In a traditional company, it’s a common practice to have a human resources representative present during an employee termination. 

If, like many small business owners, you have no HR personnel, you should bring someone you trust, like a senior member of the company, to be a witness to your conversation.

This will help to prove you acted legally and ethically in case the employee brings a legal suit against you. It may also help both sides to stay civil and controlled, especially if you think the employee could react angrily or emotionally to the bad news. 

4. Choose an appropriate moment

Even if you’re firing an employee for poor performance, you should fire them with tact.

Though we live in an age of video calls, social media and text messages, it’s definitely best to terminate an employee in a face-to-face meeting. 

Remember that it's never a good idea to humiliate anyone. Treat the person you're firing with dignity and give them the news privately, not in front of other employees. 

If possible, fire the person at the end of the day, when other employees have left, so they don’t need to leave in front of them. This helps avoid an unpleasant scene, which can cause bad for the morale of the rest of your employees. 

5. Be clear about why you’re firing them

Don’t start a termination meeting by chatting about the weather; dragging out an unpleasant task is not fair to the employee. 

Don’t hint at the fact that they’re fired and hope they’ll get the message. Say it clearly, but kindly: "we're letting you go.” Or, more literally, “you’re fired.” 

It’s important to clearly explain what your reasons are. Is the company downsizing due to poor business performance? Is the employee’s performance the reason? Whatever the reason, it’s best to be clear as early as possible in the conversation. 

If you’re firing due to downsizing, you don’t want to burn any bridges. Perhaps you’ll want to collaborate with this person in the future.

6. Conclude the firing gracefully

Provide the employee with the termination letter, and offer to answer any questions. Make sure you answer as simply and clearly as you can.

Let the employee know about the final paycheck and when the company will terminate any benefits. This is also a good time to discuss any severance pay, healthcare extensions, or legal releases you’d like them to sign. 

Allow time for the employee to collect their personal belongings and return any company property.

Though both sides will likely be feeling uncomfortable, it’s a good idea to walk your employee out and wish them the best. 

7. Inform the rest of your company

The rest of your employees will naturally want to know what happened, so it’s important to let them know that the terminated employee is no longer working for the company. 

Refrain from bad-mouthing the fired employee. Keep it simple and focused on how your business will be reorganizing moving forward and how you'll reassign the former employee's duties. Allow your employees to ask questions.

NEXT helps you get through challenges

Letting go of employees never gets easier, even with experience. Still, as a business owner, you’re responsible for protecting your business from anything that could go wrong.

We can help in that area. At NEXT, we’ve made buying business insurance to protect your business easy and affordable.

You can view coverage options, get a quote and purchase a policy in less than 10 minutes. If you need more than one type of coverage, you’ll save up to 10% when you bundle policies together. 

You’ll get access to your certificate of insurance as soon as you make a payment. 

Get started with a free quote today.

How to fire an employee the right way: 7 tips


Wil Chan
About the author

Wil Chan is a content writer at NEXT and has been a professional writer for more than ten years. His work has been featured in publications including Forbes and Greatist. He has run a freelance business since 2016 and feels passionate about helping self-employed people in all industries succeed.

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