Don’t Terminate Without the Right Policies

Terminations — where the rubber meets the road in HR. The most angst, the most tears (or screams), and the most lawsuits. Your terminations policy is critical. Today, courtesy of BLR’s SmartPolicies^® program, we’ll review the key elements your policy should cover.

Compensation, Benefits, and Financial Issues

Severance pay. What are your guidelines (e.g., how many years of service to obtain certain levels of severance)? Are there any situations in which severance will not be granted?

Unemployment Compensation. Do you have required procedures or paperwork?

Sick leave/vacation pay/PTO. Does a terminating employee receive pay in lieu of unused time? 

Health/Life Insurance. When does insurance terminate? What opportunities exist to continue coverage? How about COBRA coverage?

Compensation. What rules govern final paychecks? What will be the status of bonus payments and commissions? Stock options, etc.?

Repayment of debt. What provisions will cover repayment of loans or advances, or other outstanding debts?

Pensions/401(k), and other retirement plans. What are the rules for payouts? What options are there for transfer of funds, etc.?

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Perquisites. What policies and procedures govern the return or purchase of company cars? What will happen with club or gym memberships?

Termination Definitions and Procedures

Type of termination. What constitutes “voluntary” and “involuntary” termination? Examples of voluntary terminations might include written resignations, job abandonment, extended absences without the proper notification, retirement, refusal of a transfer after a job elimination, failure to report for light duty, failure to report status during a leave of absence, and failure to return after a leave of absence. Examples of involuntary terminations might include permanent layoffs, discharge for cause, death, and disability.

Notice. If an employee decides to resign voluntarily, how much advance notice must he or she give?  Must this be in writing?

Dismissal procedures and responsibilities. Who makes final decisions about terminations? Who must approve? Who must be notified, when and how? What other procedures must be followed and by whom (supervisor, manager, decision maker, HR, payroll, security)?

Special responsibilities, offices. If the person terminating held certain positions or was authorized for certain tasks, be sure to remove the terminated person and appoint someone new.

For example, if this person was authorized to do banking, eliminate the person from the signature cards and appoint someone new. Or, if this person has password access to certain important websites, say customer sites or vendor sites, get the password and change it.

Security. What will security’s role be? The working situations and attitudes of certain terminating employees may suggest that special procedures should be used. For example, if the person has access to sensitive information or critical computer systems, the company may want to block the person’s access. In some cases, such procedures might be required, for example, for people with unescorted access to nuclear facilities.

Company Property. Whose responsibility will it be to ensure that the employee returns all company property, drawings, tools, reference data, uniforms, ID cards, credit cards, keys, etc.? Computers, BlackBerry^®, and other electronic equipment?

Layoff notice. If callbacks are possible, what are the procedures and order of callback?

Restoration of Length of Service. When former employees return from layoff or other status, will they be restored to their former status?

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Reference Letters. What will the company’s policy be with respect to letters of reference? Where will requests for references go (e.g., to HR)?

Exit/Termination Interview. Will you require exit interviews? Who will conduct them?

Contract. If there is an employment contract, its provisions will have to be honored.

Legal agreements.  Will you require confidentiality and noncompete agreements? Other agreements?

In tomorrow’s CED, we’ll take a look at SmartPolicies‘ pretermination questions and termination planning.

Download your free copy of 20 Must-Have Employee Handbook Policies today!