How to Dismiss an Employee: A Simple Guide to Handling Employee Termination

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<h2>Key Takeaways</h2>
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<li>In situations of gross misconduct, dismiss the employee immediately according to your company policies.</li>
<li>It’s best to dismiss Poor Performers because they hurt company performance.</li>
<li>Before you dismiss a Poor Performer, carry out my Five Step Turnaround Process to see if you can get them to improve.</li>
<li>If they don’t improve, move forward with dismissal.</li>
<li>If the dismissed employee came through a recruitment agency, you may be eligible for a refund.</li>
<li>After you dismiss someone, you need to reassure your existing staff and deal with any underlying problems that may lead them to question their position in your organisation.</li>
<li>Before hiring again, reflect on what went wrong so that you can improve for next time.</li>
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You may need to dismiss an employee for gross misconduct or because they’re performing poorly. Whatever the reason, it’s important to conduct the dismissal process carefully and correctly.

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Gross Misconduct

Situations classed as gross misconduct would include:

• Theft
• Violence
• Harassment
• Gross insubordination
• Being under the influence of drugs or alcohol while at work
• Any other serious breach of company policy or the law

In these situations an employee is immediately dismissed:

• You need to ensure that you follow your written policies in these cases.
• The dismissal process will likely involve doing an investigation into the incident, holding a meeting in which the employee is given the chance to give their side of the story and the employee appealing their dismissal if they have this right.

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The Five Step Turnaround Process

It’s usually best to dismiss Poor Performers because they hold back other staff members and make it harder for organisations to thrive. 

Sometimes you may first want to try to improve the situation. I recommend a three-month “turnaround process” strategy – a sequence of five steps designed to help quickly improve the employee’s performance, then go ahead with dismissal if still necessary. Here are the steps:

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Step 1: Identify Why They Haven’t Met Your Expectations

• Review the Great Performance Profile and score the employee for each competency. See where they’ve fallen below Minimum Acceptable Standards.
• Are there other reasons why they haven’t come up to scratch that aren’t contained in the Great Performance Profile, such as their general attitude?
• Were the Minimum Acceptable Standards properly understood by the employee?
• Is the Great Performance Profile realistic? Does it need to be modified (at least for future recruitment)?
• In hindsight were there signs of problems which were not thoroughly explored during recruitment of the employee? Did the employee oversell themselves? Did your organisation?

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Step 2: Conduct Frequent Performance Reviews & Verify Their Understanding

• Hold weekly performance reviews in which you track how the employee is doing.
• Make sure the employee understands what’s expected by getting them to repeat in their own words what is required.
• At this point, employees may be aware they can’t improve, and that dismissal is inevitable which may encourage them to resign before being dismissed. However, you should not intentionally make them feel like this: you are trying to create a win-win outcome for everyone.

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Step 3: Issue a Warning

• Give the employee a verbal or written warning stating that if they don’t meet Minimum Acceptable Standards within a certain time then they will be dismissed.

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Step 4: Quick Sanity Check

• Before dismissing the employee, consider whether they might perform acceptably in another job.
• Could you outsource or automate the job? Could you redistribute the role to other employees, or give someone a promotion?
• You might want to start the recruitment process confidentially before dismissing the employee. Challenging market conditions may demonstrate that it is nearly impossible to replace them, and so force you to temporarily retain a Poor Performer.

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Step 5: Employee Dismissal

• If the employee’s performance hasn’t improved after three months, then if it’s legally possible, take steps to dismiss them.
• Hold a meeting with the employee and tell them quickly and clearly that they’re being let go. Be respectful and humane. It’s a good idea to have another director or someone from HR present.
• Dismissal should never come as a surprise to the employee because you should have been communicating clearly with them throughout the process about whether their performance is meeting expectations.
• Remind them of any restrictive covenants in their employment contract.
• If you have a choice, dismiss staff on a Monday; they will have time to digest the news and immediately take action. Whereas if you dismiss staff on a Friday, they will feel horrible all weekend and can’t take much action to pick themselves up.
• Put the employee on gardening leave so that the team can move on and you remove the potential for a bad atmosphere in the workplace.
• Hold an Exit Interview even though you’ve dismissed them. It often provides great feedback to improve the company’s performance. For more on these, see our separate guide Discover the Power of Exit Interviews: Gain Insight to Improve Your Workplace.

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What to Do After You’ve Dismissed an Employee

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Reassure your existing staff

Your staff may feel happy, indifferent, sad or angry about the dismissal of their colleague. The dismissal may have raised issues in their minds about the company and their future in it. They may start to think about other options and create a domino effect of further staff leaving.

To avoid losing good staff, you need to show that you appreciate them. Make sure that you deal swiftly with any feedback about the treatment of staff that came up at the Exit Interview. 

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Pause and reflect

Before hiring again, you need to think about what went wrong:

• Was the Great Performance Profile realistic? Were Key Competencies missing, or Minimum Acceptable Standards unrealistic?
• Was the recruitment process sufficiently rigorous? Were steps skipped, such as Job Simulations or Reference Calls?
• Did the employee receive effective performance management? You may need to address this with their line manager.
• Did the employee oversell their capabilities during the recruitment process? If so, how will you spot similar issues in future Structured Interviews, Job Simulations and Reference Calls?

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Recruitment Agency Guarantees

• One of the advantages of recruitment agencies is that if a new hire doesn’t work out within a short time period you may get a refund or a replacement.
• Under a “refund” you’ll be paid back some percentage of agency fees, often in the form of a time-limited credit note.
• With a replacement guarantee the agency arranges a replacement employee. The disadvantage of this is that you won’t necessarily receive a similar candidate and it may take time for the agency to find someone.

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Additional Resources

• Talent Acquisition Book; The Secrets of Great Recruitment: How to Recruit Great Employees
• Downloadable PDF guide; Strategies for Handling & Dismissing Poor Performers.
• Article; Dismissing an Employee: The 5-Step Process You Can't Afford to Skip.