(This column originally appeared in The Inquirer)
Through the first nine months of 2023 there were more than 600,000 layoffs, a 198% increase from the same period in 2022, a new study found.
Layoffs — particularly in technology, retail, health care, and media — have been growing significantly this year, according to a new study from career services firm Challenger, Gray & Christmas. Despite the hot job market, the study found that through the first nine months of 2023 there were more than 600,000 layoffs, a 198% increase from the same period in 2022. The number of corporate layoffs this year is second only to 2009′s Great Recession.
Whether or not your business is struggling to find workers, it’s likely that you’re also terminating employees for various reasons. But are you doing this the right way? Here are some things to keep in mind when you next have to let someone go.
The first thing to consider when deciding to terminate an employee is reducing any potential disruption.
“Employers should always think about operational gaps if someone separates from the company, meaning is there someone else who can step in temporarily to offset any problems from losing business continuity due to that disruption,” said Monica Siciliano, a partner at De Novo HRConsulting & Business Advisory in Southampton. “And if that’s a risk, then employers will want to address appropriate redundancies that should be put in place as well as cross training.”
There are also compensation ramifications of a decision to terminate an employee. In most cases, an employer will need to make sure that all unused vacation and sick time has been paid out and that the employee has been paid completely through their end date so as not to be exposed to any wage-theft claims. In Pennsylvania, New Jersey, and Delaware, workers without an employment contract are generally employed “at-will” which means that an employer (or the employee) is free to terminate their employment usually with little reason. However, employers have to be careful that they’re not acting in a discriminatory or retaliatory manner.
“It’s never a good idea to terminate someone after they have made a complaint,” Mike Torchia, an employment attorney based in Huntingdon Valley said. “If the termination takes place too quickly then it could be considered to be retaliatory and not related to the employee’s performance. Documenting the decision in advance — even before communicating the decision to the employee — is a good way to ensure that there’s a supported timeline.”
Torchia said that you don’t need a detailed report for your documentation. “It could be an email to yourself or to human resources or to your partner that says ‘we spoke today and we decided to terminate Rachel, but we’re going to do it when she comes back from vacation.’ ”
When it comes to documentation, it’s always best to start that process as early as possible. When an employee is underperforming, is exhibiting poor behavior, or has received complaints from others, make sure to keep a time-stamped log of these incidents that can be discussed with the employee at a termination meeting and used as support for your decision. If your business has union employees, you have to also make sure that you’re complying with all terms in the union’s collective bargaining agreement.
“It’s the number-one piece of advice we give for termination,” said Torchia. “When a client calls us and says they want to terminate an employee, we always ask if they have any documentation. If there’s nothing in writing and there’s a challenge to the termination based on discrimination or something else, then it’s going to be harder to prove that it’s a performance issue.”
Siciliano also agrees that documentation — and communication — are both critical.
“A termination should never be a surprise to an employee,” she said. “And if the individual’s going to be surprised, I would say that we need to be accountable for our role and not giving them a clear line of sight to their goals and letting them know where they’re falling short.”
Meet and separate as amicably as possible
Termination meetings with an employee can be awkward, but if done right can not only make the exit more tenable to the employee but can also provide valuable feedback to the employer. Siciliano says employers should ensure that there is always more than one person from the company present at the meeting, preferably someone from your human resources team who can act as a witness. Meetings don’t necessarily have to be in-person either (“Zoom calls can actually be easier and less disruptive for both the employer and employee,” Siciliano said) and the room you use should also be chosen intentionally.
“It may seem minor,” Siciliano said “But the room is an important detail for me. An employer doesn’t want to block an employee’s egress or they could be accused of physical intimidation or worse.”
Finally, and when terminating an employee, it’s always a good practice to have a formal and signed separation agreement. While new rules from the NLRB prohibit employers from making severance pay contingent, it’s important for both parties to agree on the final terms of the termination, which can include things like final payout amounts, dates of release, and even reasons for the termination.
“The termination should be done with respect,” said Torchia. “Our experience is that employees are much more likely to sue the employer if they are upset with the way that they were terminated.”