How to Fire an Employee Legally

Hiring a great employee is exhilarating. Firing a bad one can be painful--and fraught with legal land mines. Sometimes you get lucky: The employee, realizing his job is in jeopardy, resigns. If not, the following steps will help make the task less onerous--as well as less susceptible to litigation.

Ask your human resources department to help you with your plan for termination. There is a quagmire of regulations for both union and nonunion employees.

Establish an extensive paper trail. Don't sugarcoat the problems in the employee's performance review (see How to Prepare for a Salary Review). A record of specific warnings and a proposed corrective action plan with the employee's signature should be on file, preferably at least 90 days before the actual firing.

Ask an attorney or labor relations specialist to look over the file. Investing time and money on an expert employment attorney before the termination can save agony and the far greater costs of a postfiring lawsuit.

Assemble a package of detailed exit information for the employee. Include severance package information and an account of any benefits due.

Prepare a list of all company-issued property--from keys and credit cards to computers and cellular phones--to collect from the employee. Back up any important files to which the employee has access and arrange to terminate his or her computer access within an agreed-upon time frame.

Have a witness present at the meeting. A third party tends to diffuse emotional outbursts and offers a good defense against a later "he said, she said" dispute.

Plan what you're going to say and then stick to your script as closely as possible. If necessary, review your plan with someone from human resources. Get to the point quickly; enumerate the offenses, the warnings issued and the failure to implement the listed corrective actions. Resolve to remain calm even if the employee becomes emotional or combative.

Have all waivers and agreements ready to sign. Your best protection against a future lawsuit is a signed release of liability. If possible, make any optional severance pay or benefits extensions dependent on that signing.

Remember that any future reference calls about the terminated employee should confirm only dates of employment and salary to avoid possible litigation.


  • Prevent leaks about preparations for the firing. Tell only the worker's direct supervisors, the human resources department and any other witnesses attending the termination meeting. Prepare a list of helpful local resources such as support groups for the departing employee. Reevaluate your hiring guidelines to see if they need to be more specific. One firm actually had to put in writing that sleeping on the job was not permitted after some employees claimed, "Nobody said we couldn't!"


  • If your business is located overseas, the legal quagmire surrounding terminations is vast. Be certain you get detailed and expert guidance.

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