How to Manage Employee Terminations with Compliance and Compassion

Ending an employment relationship is one of the toughest responsibilities for any employer. Whether it’s due to performance, misconduct, or redundancy, every termination carries some level of risk. Without a structured, well-documented process, employers open themselves to legal challenges, compliance issues, and reputational damage. 

Handled correctly, however, termination can be professional, compliant, and respectful. Below, we’ll explore common reasons for ending an employment relationship and best practices for managing the termination process. 

common reasons for employee termination

• PERFORMANCE ISSUES- Consistently failing to meet expectations, improve after feedback, or maintain required productivity standards. 

• MISCONDUCT & INSUBORDINATION- Breaches of company policy such as dishonesty, harassment, bullying, or refusal to follow instructions. 

• ATTENDANCE & RELIABILITY- Excessive absenteeism, tardiness, or failure to comply with leave and scheduling policies. 

• THEFT, FRAUD, OR BREACH OF TRUST- Stealing property, falsifying records, or sharing confidential company information. 

• VIOLENCE, THREATS, OR SUBSTANCE ABUSE- Actions that endanger safety, create hostility, or violate workplace drug and alcohol policies. 

• SAFETY VIOLATIONS- Ignoring or disregarding safety protocols that put others at risk. 

• REDUNDANCY OR BUSINESS RESTRUCTURING- When roles are eliminated due to downsizing, automation, or operational changes. 

• AT-WILL EMPLOYMENT- In many states, employers may terminate for any lawful reason, provided it is not discriminatory or retaliatory. 

best practices for a smooth termination process

1. DOCUMENT, DOCUMENT, DOCUMENT

   Thorough and ongoing documentation is your best defense in the event of disputes or legal Challenges. The more complete your documentation, the stronger your position if the termination is later challenged. 

   • Record performance or conduct issues as they occur and discuss these with the employee. 

   • Keep a history of disciplinary actions, performance improvement plans, and warnings. 

   • Show a clear pattern of concern, along with your good faith efforts to support the employee’s improvement. 

2. DON’T RELY SOLELY ON AT-WILL EMPLOYMENT

   While at-will employment allows termination without cause, exceptions exist particularly around protected characteristics (such as race, sex, age, religion, disability) or retaliation after exercising a legal right. 

   • Clearly communicate the legitimate, documented reason for the termination.

   • Avoid vague explanations like “bad fit,” which can leave employees drawing their own conclusions.

   • Ensure consistency across similar cases to reduce the appearance of bias or discrimination. 

3. BE TIMELY

   Terminations should follow promptly after the incident or the final performance issue. Waiting weeks or months can complicate the situation. 

   • Delay may make the decision look arbitrary. 

   • Employees could take protected actions (e.g., request medical leave, file a complaint) in the interim, which may give the appearance of retaliation. 

   • Acting quickly demonstrates fairness and professionalism. 

4. PLAN THE TERMINATION MEETING

   A well-prepared, respectful meeting helps protect your organization and the employee’s dignity. 

   • Hold the meeting in a private space, ideally in person if the employee is not remote. 

   • Prepare a script or outline to stay focused and consistent. 

   • Present relevant documents, such as last chance agreements or performance records. 

   • Allow time for the employee to ask questions and let them know who they can contact afterward. 

5. COVER COMPENSATION AND BENEFITS

   Clear communication about final pay and benefits avoids confusion and ensures compliance. 

   • Confirm the timing and method of the final paycheck.

   • Explain benefits end dates, COBRA or state continuation options, and retirement plan details. 

   • Review any post-employment contractual obligations, such as noncompete or nondisclosure agreements. 

6. ENSURE LEGAL AND COMPLIANCE STEPS ARE COVERED

   Stay compliant with federal and state requirements: 

   • Provide any required termination notices (unemployment insurance, COBRA, WARN Act, etc.). 

   • Check payout obligations for accrued PTO or vacation under state law. 

   • Ensure final pay deadlines and restrictions on deductions are followed. 

7. HANDLE POST-TERMINATION LOGISTICS

   Once the meeting is complete, finalize the details to protect both your company and the employee’s transition. 

   • Collect company property and cancel access to systems, cards, and accounts. 

   • Notify insurance providers and your COBRA administrator. 

   • Update HRIS, payroll, and organizational charts. 

   • Inform relevant team members as appropriate, balancing transparency with confidentiality. 

THE BOTTOM LINE

Termination decisions will always involve a level of risk. However, with documentation, consistency, compliance, and compassion, employers can greatly reduce legal exposure while protecting their reputation. Above all, treating employees fairly, even at the end of the relationship, demonstrates organizational integrity and builds trust among the remaining team. 

Need help creating a compliant, step-by-step termination process? We can guide you with best practices, tools, and tailored support. Contact us today!