What Makes an Employment Termination Policy Sound?

With unemployment numbers growing during the coronavirus pandemic, many companies are being forced to reconcile with a new reality if furloughing or laying off entire staff.

When an entire business shutters due to health concerns, employment termination is not being done as a result of an employee’s actions or a desire to bring in new candidates.

But current circumstances are an anomaly, and as the economy returns to normal, more companies may want to rethink their employment termination policy and whether it is sound.

What Makes a Good Employment Termination Policy?

Before continuing, it is important to understand the two forms of employee termination: voluntary and involuntary

Voluntary termination occurs when the employee submits a resignation letter to the employer stating their intention to leave the company at a current or future date. An employer can and should encourage this to happen with a fair benefits package that the employee would be willing to accept.

Involuntary termination occurs when the employer chooses to no longer retain an employee either because of performance, violation of company policy, an inability to pay the employee, or other reasons.

In the case of voluntary termination, things are more likely to end on good terms. For involuntary termination, a company should keep the following things in mind to prevent conflict or other issues.

What to Include in Your Policy

While you are not required to clarify why you are terminating an employee, you should be prepared to answer questions. These clarifications may help to keep emotions in check and protect you from accusations related to wrongful termination or discrimination. Here are steps to take during a termination meeting.

  1. Make it clear that the decision has been made and the date and time of termination.
  2. Cite key facts (lateness, work performance, behavior, etc.)
  3. Review the benefits packages if applicable, including how they will receive their last check or any unpaid vacation time.
  4. How to request references.
  5. Review non-disclosure or non-compete clauses that are in effect.
  6. What will happen following the meeting (gathering belonging, communication with co-workers, exit interviews, etc.)
  7. Contact numbers if there are issues following termination.

These are not required, but these may be enough to give the employee more understanding or acceptance. During the meeting, bring in the employee’s direct supervisor, and an HR representative or other witness.

What to Avoid

The worst thing an employer can do is enter into a termination meeting unprepared. While all 50 states are “at-will,” meaning an employer can terminate an employee for any reason (the sound of their voice included), doing so without covering all of your bases will make it easier for an employee to retaliate legally. Here are a few examples of where some companies get it wrong.

  • Failure to review contractual terms.
  • Inconsistencies in employee handbooks. 
  • Written or verbal agreements that the employee used as guidance to their own detriment (the employee may claim unfair termination in this case).
  • Defamation of employee after termination, especially when making a statement in response to a reference inquiry (it is best to only state their start and end dates and not further clarify anything), or when announcing termination to co-workers.
  • Invasive or humiliating searches of the employee’s body or personal belongings during an investigation into misconduct or when walking the employee from the building.
  • Causing emotional distress (beyond the normal explanation of termination or a reasonable request of return of company belongings).
  • Conspiring to get an employee fired or preventing them from getting a new job without justification to do so.
  • Termination of an employee following unreasonable requests that made it impossible to perform the job at a satisfactory level.
  • Violation of equal employment opportunity laws.
  • Not addressing issues related to unfair treatment or discrimination.
  • Not providing employment records at the request of the employee.

Having a good employment termination policy begins with each new hire. Clearly outline expectations for employment, perform background checks, call references, and keep all business discussions professional. Additionally, each year the employer should review the handbook and any new updates and perform reviews that make it clear where employees are doing well and could do better to ensure that there is evidence of problems that can be used to support termination later.

How to Protect the Company

Broadly speaking, the above are clear steps that make up the majority of a good termination policy. Working with an HR representative to fine-tune policies is important in determining the specific needs of your company.


Print off and use the following checklist if you are looking for more detailed information if you are looking to more closely grasp what is important for an employment termination policy.