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How to Fire an Employee

Oct. 11, 2019
There are times when it is necessary to fire an employee. Here is the way to do it correctly.

Only a truly sick person enjoys terminating an employee. Yet, there are times when it is necessary. Here is the way to do it correctly.

1. Document
Even if you live in a state with “at-will” employment, it is important to document the reasons for terminating an employee.  With documentation, you show that the termination was for cause, reducing the chance that an employee might retroactively accuse you of discrimination.  It also tempers your temper, resulting in rational decisions rather than rash ones.

If you give a verbal warning about an untenable behavior, document it to yourself. If the behavior continues, give the individual one or more written warnings with a chance for the employee to make corrections and the consequences of continuing the behavior spelled out. Ask the employee to sign an acknowledgement that he or she received the warning without the need to agree or disagree.

There are some behaviors that are so unacceptable, they must result in immediate termination. As many as possible should be identified in an employment handbook.

Of course, there are some behaviors that are so unacceptable, they must result in immediate termination.  As many as possible should be identified in an employment handbook.  Documentation in these cases should be made after the fact.

2. Determine Final Pay
Every state treats final pay different. Some require a lump sum at termination. Others allow the employer to continue regular pay cycles. States also vary in the way money owed to the company by terminated employees is handled. According to Melanie Gentry from Comprehensive Employment Solutions, “It is often mishandling the final compensation that starts a legal action or wage and hour claim that far exceeds the amount that is disputed.”

3. Prepare a Separation Agreement
It is always a good idea to prepare a separation agreement. This notes the separation and spells out the terminated employee’s rights and responsibilities in exchange for consideration. “Consideration” is pay or benefits extended to the employee above and beyond what is absolutely required. This is necessary if the agreement is to be binding. For example, you might provide additional compensation in return for the terminated employee’s agreement to refrain from disparaging you or your company.

4. Pick a Time and Place
Decide when and where the termination is to take place. Typically, this is conference room or office with a closed door. Terminations usually occur at the end of the day to avoid the humiliation of packing up in front of others, which is uncomfortable for everyone.

There is one school of thought that terminations are better on a Friday, because word will spread and your team will have the weekend to absorb the act. Others believe that sooner is better once the decision has been made and the paperwork prepared.

5. Decide Who Should Be Present
If possible, never terminate an employee one-on-one.  It is too easy for he-said/she-said games to occur.  Two people should be present with one performing the termination and the other observing.  If the employee is a different gender, try and ensure the observer is the same gender as the terminated employee.

6. Be Matter of Fact
It is human nature to want to know the reason for a termination.  Unless the employee is being laid off due to reduced work and subject to later rehire, tread carefully.  Speak as though the conversation is being recorded because it might be (and yes, this has happened). 

Do not debate.  Do not argue.  Do not negotiate. 

Do not debate. Do not argue. Do not negotiate. Note that a final decision has been made. Then, stick to terms of the separation agreement.

7. Change Passwords
While the employee is being terminated, whoever is responsible for the company’s information technology should be changing the terminated employee’s passwords to company websites, networks, and email accounts.

8. Collect Company Property
Be sure to secure all company property possessed by the terminated employee. This includes computers, tools, vehicles, keys, key cards, credit cards, uniforms, and so on. Some items, like uniforms, may need to be dropped off or picked up later.  Include the need for the terminated employee to return items that cannot be immediately secured in the separation agreement.

Some employees will keep personal files on a company computer. Care must be taken in how these are retrieved, if they are retrieved in the first place. Employees granted access to company computers for the purpose of retrieving personal files have been known to copy and/or delete important company files.  Your employee handbook should note that any files on a company computer are considered company property.

9. Escort Out
Once an employee is terminated, the individual should not be allowed unescorted access inside the company building, save for the restroom. If the employee is packing up a desk or removing personal tools from a vehicle, someone from the company should be in attendance at all times.

10. Tell Your Team
When an office employee is being terminated, it is good practice to ask co-workers with offices near to employee to go home a few minutes early or to meet somewhere else.  The purpose is to avoid making everyone uncomfortable and turning the escorted exit into a perp-walk. 

Usually, terminations are not a surprise to co-workers.  In fact, the surprise will be that it took so long to happen.

The gathered co-workers should be told matter-of-factly what is happening. If they have already gone home, tell them at the first opportunity. Choose your words expecting them to be repeated by a friend to the terminated employee.

Usually, terminations are not a surprise to co-workers. In fact, the surprise will be that it took so long to happen.

In the case of layoffs, it is natural for the team to wonder if more layoffs are instore. Be upfront. If you believe the pain is over, say so. If other layoffs are dependent on a certain level of sales, let everyone know so they can rally behind the target.

11. Use an Attorney
Of course, this is all business advice, not legal advice. Consult an attorney familiar with the employment laws of your state about every step. Have an attorney draft or review your company handbook, a sample separation agreement, and so on. Ask your attorney what you should and should not say.

You know how to turn a wrench.  Join the Service Roundtable to learn how to turn a profit.  Learn more at, the industry’s most affordable business alliance.

About the Author

Matt Michel | Chief Executive Officer

Matt Michel was a co-founder and CEO of the Service Roundtable ( The Service Roundtable is an organization founded to help contractors improve their sales, marketing, operations, and profitability. The Service Nation Alliance is a part of this overall organization. Matt was inducted into the Contracting Business HVAC Hall of Fame in 2015. He is now an author and rancher.