Including a termination of employment policy in the employer’s written policies and procedures is advisable for several practical reasons.
- Such a policy may encourage terminating employees to provide reasonable notice of their intent to leave their employment. Such notice will be helpful to the employer in locating and training replacement personnel. The provision that eligibility for rehire will be lost for failure to provide the required notice may constitute an added incentive for many employees to furnish such notice. Importantly, the policy should not withhold a vested benefit, such as vacation pay, from an employee who chooses not to give the required notice. This will depend, of course, upon the employer’s written policy and actual practice with regard to payment of vacation time upon termination.
- A termination policy reminds the dissatisfied employee that there are administrative channels that may be of help in correcting an employment problem. A good employee leaving due to job dissatisfaction might be reminded, either by the policy or by human resources personnel, that a resolution to the problem could be found by exhausting available but untapped avenues of recourse.
- Assuming an exit interview is a part of the termination policy, the exit interview serves as a good opportunity for the company to determine the basis for the employee’s decision to leave. If animosity on the part of the employee exists, an attempt to reconcile or at least reduce this sentiment might help avoid subsequent litigation. Further, if the employee later files a claim, for example, a sexual harassment charge or lawsuit, the exit interview provides the employer with the ability to argue that the employee had an opportunity to express his or her concerns to management, but elected not to do so. Sample exit interview forms follow the sample termination policy.
- The employer needs to be sure to notify the employee and/or his or her qualified beneficiaries of their rights to continued health insurance coverage under COBRA.
- A policy such as the one below notifies the employee that he or she must promptly return all of the employer’s property on or before the employee’s last day of work.
The following forms are helpful to assist employers with making the termination of an employee a smooth and efficient process. Using an exit checklist can help ensure an employer follows all the correct procedures when an employee leaves the company. Moreover, because unnecessary employee turnover is costly and disruptive to a company, using an exit interview questionnaire or a separation summary is an excellent way to obtain candid information from terminated employees regarding their experiences with the company and to use the feedback to improve employee relations practices. These forms should either be kept in the company’s HR file or the department file for which the employee worked.
Layoff and recall
Any employer who faces the prospect of layoffs should contemplate in advance and reduce to writing the manner in which the layoff will be handled. The real risk in selecting employees for layoff or recall lies in potential claims of unlawful discrimination.
The safest way for an employer to avoid a discrimination claim, if a layoff, or reduction-in-force, becomes necessary, is to select employees for layoff on a strict seniority basis. From the standpoint of maximizing operational efficiency, however, the employer generally is better served by making its layoff determinations on the basis of employee performance rather than tenure of employment. Consequently, an employer should seek to develop a layoff and recall policy that, although designed to retain the most productive employees, objectifies to the greatest extent possible the decision regarding which employees are to be laid off or recalled, thereby reducing the likelihood of liability in a subsequent discrimination lawsuit.
Although the specific details of the process utilized by the employer to select employees for layoff and recall need not be specifically communicated to employees in the layoff and recall policy, employees should at least be informed as to the criteria used by the employer to make the selections. This may eliminate false expectations regarding the role seniority is to play in the decision‑making process. As in the sample, the policy also should contain an explanation of employee rights, benefits, and employment status for employees on temporary layoff.
Procedurally, the employer should first identify which jobs are to be eliminated. The employer should then identify which skills are necessary to perform the remaining jobs and identify which employees are best able to perform these jobs. In doing so, the employer should consider each employee’s past work performance, productivity record, attendance record, and length of service. To the extent decisions are made based on an employee’s past performance and productivity, those criteria should be in written form to provide the best discrimination protection. The employer should then make a preliminary determination regarding which employees to layoff. Before the decision is finalized, management should determine whether a disproportionate number of employees in any protected class have been preliminarily selected for layoff. If it appears that there are a disproportionate number of such employees, the employer should re-evaluate the selection process and make certain to the greatest extent possible that its decisions, whenever they vary from seniority, can be justified by business necessity. This process will help preserve the objectivity of the layoff process and minimize the risk of a successful discrimination claim arising from a reduction in force. A similar approach also may be used to determine which employees to recall, if necessary.
An employer with 100 or more employees facing the possibility of a significant layoff or plant closing should contact an attorney to ensure compliance with the federal Worker Adjustment and Retraining Notification Act (WARN). WARN requires certain prior notice obligations to covered employers in situations involving a temporary or permanent loss of employment for 50 or more employees and imposes substantial penalties upon employers who fail to provide the required notice.