Small Business Resources, Business Advice and Forms from AllBusiness.com

Terminating an Employee of Your Small Business

The manner in which you terminate an employee is very important. It is to your advantage to make provisions prior to firing or laying off an employee. An employment termination policy is sometimes desirable

to put in place that outlines what the employee is entitled to when his or her employment ends. Such a policy will typically include:

  • The terms of a severance package, which is usually commensurate with the length of time the individual has been employed and his or her position in the company
  • Payment to the employee for unused vacation days
  • Provisions for continuing health benefits after termination
  • Whether a letter of recommendation is given for potential future employers
  • In some cases employers will also help by providing outplacement services.

    Make sure you:

  • Try to make the situation as amicable as possible
  • Have a reasonable, legitimate and documented reason for the termination
  • Collect all keys, I.D.’s and other company related materials in the employee’s possession
  • Make sure you know his or her computer password
  • Terminate employees in person, or have the employee’s immediate supervisor handle the task in person
  • Make sure you don’t:

  • Discuss an impending termination with other employees (except his or her immediate supervisor)
  • Fire someone based on rumor, innuendo, unsubstantiated claims or for personal or discriminatory reasons
  • Make any statements that could be deemed personal, disparaging or defamatory

  • An Effective Way to Hire and Fire
    Host Hattie Bryant of Small Business School interviews Al Smith of Angell & Phelps, a chocolate manufacturer in Daytona Beach, Florida.