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Learn2 Terminate an Employee
(5 steps)
How to fire without getting burned

At some point, every employer must bid farewell to an unproductive, perpetually tardy, or otherwise troublesome employee. But it's almost never easy to take this step. In fact, many bosses wait until the discomfort becomes acute before they act.

Most American employees work under at-will contracts. That is, both employer and employee can theoretically end the relationship at any time, for just about any reason. But in practice, a maze of laws and court rulings is making matters more complicated all the time.

This doesn't mean your hands are tied. You still have the right to let under-performing workers go, but you must build a solid case. Here's a guide to potential trouble spots, plus some diplomatic suggestions on how to make your employee's last day as painless as possible.

Before you begin

Every U.S. state except Montana operates under the assumption of at-will employment. However, a patchwork of laws and court decisions makes the situation much more complicated. If you have concerns about your specific case, consult a good attorney who specializes in workplace issues.

In the meantime, make sure you don't offer employees what's known as an implied contract. Even without an actual signed document, you may be making unintended promises that courts could interpret as a legal contract. Here are some reasons why courts have ruled that an implied employment contract was in effect:

A long term of service with one company

A history of raises and promotions

Written policies (such as employee handbooks) that define the conditions under which an employee can be fired

Vague written or verbal promises of a permanent position or a long future with the company during or after the recruiting process (for example, an offer letter stating an annual salary instead of a bi-weekly pay rate could be misinterpreted as a yearly contract)
To help avoid implied contracts, have new employees sign an agreement that specifically states that their employment is at-will, or include such a statement on job applications. Courts in Alaska, Arizona, California, Connecticut, Delaware, Idaho, Kansas, Massachusetts, Nevada, Utah, and Wyoming are particularly strict. And in Montana, a termination must have "good cause," which can include clearly unsatisfactory performance, economic hardship, or legitimate business restructuring.

It's always a good idea to keep informed of any changes to employment laws in your country, state, or even your county.

   Go to Step 1 of 5

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Step 1: Be sure you're sure
Step 2: Be aware of potential problems
Step 3: Avoid illegal termination
Step 4: Build a case
Step 5: Design an exit package

Documentation of under-performance or misconduct
Advice of an attorney specializing in employment issues
The original employment contract (if any)
Past performance reviews (if any)
Evidence that you tried to remedy the situation before firing the employee