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The Company Law states, ‘People may come, people may go, but the Company stays forever’. Businesses cannot retain all their employees forever. Even the law justifies retrenchment of employees in cases when a business cannot be run profitably. Voluntary resignation, unfavorable market conditions, unethical behavior, or inefficient performance can be one of the reasons. To ensure a satisfactory process of partition of an employee from the company, an effective and ethical Termination Policy should be in place.

With the development of Labor and compensation laws, every company should dedicatedly ensure that employees are not harassed and the documentary formalities are effectively carried out. Businesses need to understand that not every partition is under same circumstances. To frame a Termination Policy that justifies its presence, different procedures should be incorporated which can be followed strictly under distinctive circumstances.

Voluntary Resignation-

An employee can resign from his services due to reasons like increased compensation or influential role offered by the new company. Immediate supervisor must ensure that employee retention procedures are followed. However, when the partition of the employee is unworkable, a smooth route of exit should be provided. Remember, parted employees often return to their previous employers if they do not find the new job comfortable.

Termination due to factors like unethical behavior, or inefficient work performance-

Employers need to take additional care in such circumstances. Plus, this has to be the last measure in case the employee skill improvement program has not delivered satisfactory outcomes. The most vital aspect is to ensure that the morale of other employees is not hindered. Enumerated below are the steps that can be followed-

  • A letter indicating that the management is planning the termination should be sent to the employee well in advance.
  • The employee should be provided with a fair chance to justify his association with the company.
  • An in-person meeting should be held wherein a representative from the management should elaborate the reasons why the employee is being terminated.
  • Exit-interviews are very common nowadays. A representative from the Human Resource team can interact with the employee, or a questionnaire can be sent to the employee to express his/her views regarding the employment with the company.
  • Full and final settlement of any dues should be conducted without delay so as to leave a last impressive mark on the employee.

Common mistakes that employers tend to make during terminations

Businesses cannot prevent themselves from the unlikable task of terminating employee/s. Though the basis behind every termination may be different, the outcome is common – An employee discontinues rendering services to the business. Enumerated hereunder are the most common blunders that employers tend to make while terminating the services of an employee. To ensure that the business is not affected negatively with the disassociation of the employee, businesses should make every attempt to prevent these mistakes.

Termination Policy of the company is vague-

A precise and unambiguous Termination Policy should always be maintained so as to make sure that the employees are not encouraged to hinder the rights of the employer. Also, every effort should be made to revise the existing policy ensuring the incorporation of modifications as per the changing circumstances.

The Appraisal credentials are not maintained properly-

One of the most common causes for the termination of an employee is the lack of ability to deliver the expected results. Appraisal documentation should be well maintained so as to reflect the actual picture of employee’s past performance. Line Managers must ensure that every subordinate is regularly assessed and documentation of the facts is preserved.

Absence of Termination Authority clause in the Appointment Letter-

A detailed Letter of Appointment with an explanatory Termination Authority clause makes it convenient for the employer to terminate the services on reasonable grounds. Businesses often give away a one-page Letter of Appointment; however such practices should be discontinued so as to help the management to take timely and effective decisions regarding the termination of an employee.

Failure in following the defined Termination Norms-

Termination is definitely an unpleasant experience for an employee. Discontent can emerge in circumstances when the defined Termination Norms are not followed during the process. An advance notice, a show cause notice, severance compensation, and other documented norms should be taken care of. Else, the management is likely to spread restlessness and insecurity among the entire workforce.

Errors during the Exit Interviews-

Discussions are often held with the employee prior to finalizing the conditions of termination. During such dialogues, the Line Manager or the Human Resource Manager must ensure that the employee is given an appropriate opportunity to justify the association with the company. Lengthy conversations may lead to discomforting situations, wherein the employee can prevail over the views of the Manager. Ensuring that the meeting conveys the honest outlook of the employer should be the prime motive.

How can we help? – Our experts have framed effective Termination Policies for businesses. We also assist companies in conducting in-person exit interviews with the employee. Plus, the feedback is discussed with the management and it is ensured that the workforce employed in the company is motivated and dedicated to deliver the best.

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Vivek Gaur, Pacific Ventures
2013-10-29, 09:42
Impressive guys. I visited few webpages prior to landing at your website. I beli...
Mohit Goyal , DCG & Co
2013-10-29, 09:42
You have made Human Resource solutions look so easy. We have started using your ...