The Fair Way To Fire Employees

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Author John Towler, Ph.D.

A discussion of fair practices for employee terminations.

Terminating an employee has always been one of the most difficult tasks facing any manager. Some handle it well and others make a mess of things. It can be painful, highly emotional, and put the firm at risk for legal actions. Or it can lead to a humane parting, handled with sensitivity.

But Canadian businesses are caught in a bind. They have an aging workforce; mandatory retirement seems likely to disappear; and they need to make room for younger workers with fresh ideas. Firing bad employees, however, or even discharging good ones who have become redundant for various valid reasons, can result in lawsuits, damaging publicity, and more trouble than they thought possible. Here are some points to keep in mind.

First, the company should be a good corporate citizen and treat its departing employees in an equitable manner. If common decency doesn’t motivate the firm to take this approach, it might consider what can happen if it fails to do so. The best that can happen is that the employee will leave with great anger and hostility, which will reflect unfavorably on the company. The worst is that the disgruntled worker may be successful in a legal action, which will cost the firm many times what a fair severance package would have cost, to say nothing of the court costs, lawyers’ fees, and bad press.

Second, the way terminated employees are treated has an immediate and direct effect on those left behind. If one of your co-workers has been terminated and treated like dirt by the company, you can’t help thinking you will get the same treatment if and when your time comes. Naturally, this will affect your attitude toward the firm and your commitment and motivation. In fact, if you are smart, you will be ready to get out before you see the same thing happening to you. Multiply these feelings by the number of people remaining in the firm and you have the foundation for massive discontent, productivity problems, and other unforeseen effects.

And by providing assistance to the departing employee as part of the severance package, you may be able to reduce the cost of the severance and diminish the risk of future legal actions. Canadian law demands that any employee who has been with you for more than five years be provided with one week’s salary for each year of service up to a maximum of 26 weeks. Thus if, you have terminated a $30,000-a-year employee, you must give him or her $15,000 in severance pay, plus accumulated benefits.

Actually, severance packages are running much higher than this, approaching twice what the law demands. In the event that a court action results from improper firing or unfair treatment, figures of three times the annual salary are not uncommon.

There are a few other twists appearing now with changes in legislation that forbid discrimination by sex, age, race, and so on. For example, if you fire an older worker and replace him or her with a younger one, you may be setting yourself up for a claim based on discrimination because of age.

Many firms are realizing that they must tread carefully in these matters, that it is in their best interests to offer some form of relocation counseling to departing employees as part of the severance package. Such counseling can take various forms, ranging from one-on-one counseling to group seminars, from little or no office support to a full-scale office placed at the former employee’s disposal.

The usual procedure is to avoid any potentially embarrassing situations in an emotionally laden meeting by having the relocation counselor present when the termination notice is given to the employee. The company official reviews the severance procedure and package, then leaves the counselor to explain how the employee will be helped over the next few weeks or months, depending on the level of service being provided.

A minimal level of support might include immediate counseling and sessions to help former employees develop resumes, sharpen their interviewing skills, and plan their job searches. Some firms may provide assistance in setting goals and career counseling. Often, some of the learning activities are handled in small-group sessions.

The level of relocation assistance the company provides seldom involves less support than that described, but it may offer much more. Senior management and executive-level personnel are frequently offered assistance which includes professional, individual attention for both terminated employees and their spouses and family members. Such support may include aptitude testing, skills analysis, comprehensive psychological assessments, financial counseling, marital counseling, and practice in interview situations.

The client is also helped in his or her efforts to create a good resume and solicit significant references to accompany it. People at this level are given complete office support, as well, which may include secretarial assistance, shared office space, typing services, mailing and copying service, and a telephone-answering service.

The benefits for both the employees and the firm are substantial. From the employees’ point of view, such assistance means they aren’t simply left to cope with the psychological, financial, and employment problems arising from their terminations.

Relocation counseling is like a life line for these people, many of whom haven’t had to look for a job or sell themselves for years. Knowing how to develop a resume, how and where to search for a position, and how to handle themselves in job interviews are essential skills for them now. Knowing there is someone there to assist them is comforting indeed, and realizing there are others in the same boat is, in itself, a relief. Psychologists established some time ago the truth of the old adage: Misery loves company.

For the company, relocation counseling means it is not only offering employees valuable services, but also enhancing its corporate image and assuring the remaining workforce about its interest in employees in general.

Naturally, the costs of these services vary with their complexity and the length of time they are made available to employees. Typically, the younger, better educated, and more skilled the employees, the easier it is for them to find new positions. Poorly educated, relatively unskilled employees have a much harder time locating new jobs. Unfortunately, the people who find it the most difficult are those older than 45. Regardless of their experience, skills, and education, these people typically learn that it takes more work over a longer time to find any new job. It is not uncommon for them to take a year or more to find suitable employment.

Now that the average Canadian is nearing middle age, we will find an increasing number of older people everywhere. Firms wishing to rejuvenate their workforces by encouraging older workers to take early retirement or by terminating them will have to take a hard look at their obligations to provide relocation counseling, if they hope to avoid serious personnel problems. Relocation counseling services and pre-retirement planning programs will certainly become accepted and expected parts of business practices in the future, especially if mandatory retirement is declared illegal. If your firm isn’t offering these services now, you are already behind the times. After all, you only need to put yourself in the position of the terminated employee to realize how essential such programs can be. Wouldn’t you want to have them available if you lost your job?

John Towler is a Psychologist and the founder of Creative Organizational Design. Please send comments about this article to jtowler@creativeorgdesign.com. For more information, please contact us.

Re-printable with permission.