Every employer will inevitably find themselves in a situation where they are faced with the task of terminating an employee. The grounds for termination may vary, but it is indisputable that the process must be handled very delicately, especially in jurisdictions with an employment law regime which is pro-employee. This article hopes to address the general ways in which employers can terminate an employee without falling foul of employment jurisprudence. However, as a caveat, it must be pointed out that certain jurisdictions may have higher or lower thresholds and/or specific statutory requirements; therefore, it is always best to consult a local employment lawyer before taking any steps towards termination.
The first step that is important is to identify the grounds of termination. There are generally 3 main grounds for termination, ie poor performance, misconduct and retrenchment. Each of these grounds have specific processes and procedures or “best practices” which should be followed before taking the ultimate harsh step of termination.
Poor performance is one of the more difficult grounds of termination as “poor performance” in itself is very subjective. Generally, before you terminate an employee, you should ask yourself these basic questions:-
(a) how was the employee performing poorly?
(b) was the employee warned of their poor performance?
(c) was the employee given sufficient time to improve?
(d) was the employee given sufficient assistance and guidance in order for them to improve?
(e) did the employee fail to improve after numerous attempts?
It is necessary that the employee be given clear indicators of how poor their performance was, and in what manner they can improve, before terminating. For example, merely saying “your performance is poor” will not be legally justifiable. Add details and specifics, for example “For the past 8 months, you have been under target by 70-90%.” , or “You failed to close any key accounts in the past 10 months”.
It is necessary to give the employee some sort of performance improvement plan, with objective measurements of performance. Only when the employee repeatedly fails this plan, should you consider the step of termination. Remember, avoid subjective descriptions like “performing poorly” or “not doing the job well enough,” but lead with specific, objective examples.
Termination for misconduct can be somewhat straightforward if the misconduct is clear. Sometimes it may be necessary to go through a process known as the “domestic inquiry,” whereby employees of a higher rank than the accused employee will sit as a tribunal and hear the charges (in a semi-courtroom like situation). The domestic inquiry panel will rule on the employee’s guilt after hearing all the evidence, and make a recommendation to the management.
This process is usually recommended when you are not so clear if the employee committed the misconduct, of if it appears that the employee may have a valid explanation. Always remember the cardinal rule is that the employee must be given the right to be heard and explain.
Sometimes the domestic inquiry may not be necessary if the misconduct is clear (eg: the employee is caught on the CCTV stealing money) or if the employee confesses. You may proceed to terminate the employee if the misconduct is severe enough to warrant termination. (For example, it is generally accepted that theft or violence in the office is severe enough to warrant termination. Breach of the company’s policies, may not, however, if the infraction is minor).
Retrenchment occurs when the employee’s position becomes redundant, ie there is a surplus of labour or the employee’s position and role has diminished or disappeared such that it is no longer required. Retrenchment is tricky as documentary evidence must be available to justify the retrenchment (eg: dwindling sales, shutting down of a business, cost-cutting exercises).
Also, the redundancy must be genuine and not “cooked up” just to terminate the employee. Some jurisdictions like Malaysia may also require you to make statutory filings with the Ministry of Labour upon retrenchment. There will also be certain statutory requirements for lay-off benefits and notice periods, so it is advisable to check with a local employment lawyer to see exactly what you need to comply with as this will vary from jurisdiction to jurisdiction.