Let me begin by stating the Professional Liability Insurance Group does not provide legal advice and strongly advises that every business seek appropriate legal and professional advice for all business needs.
One of the biggest concerns when you’re terminating an employee contract is whether there will be repercussions from the event. There are numerous issues that can result from firing employees, including sabotage from the employee, discontent among their peers and the possibility of lawsuits.
The latter of these can be particularly troublesome and harder to avoid. Any lawsuit filed against your company can be a heavy financial burden. You have to defend it and possibly pay compensation.
The only way to reduce your responsibility is to ensure you are actively attempting to avoid a lawsuit when firing employees. Here are some simple ways to help:
The first step is to know what is legal and what is not legal. This can differ depending on your state, but there are lawyers who can help you understand when you have justification for terminating an employee’s contract.
This is the most important aspect of protecting your firm. Every interaction between you and your employee should be documented. This should include written and verbal warnings, performance reviews, minutes of meetings, records of employee absenteeism and steps you’ve taken to resolve issues.
At the same time, you should ensure the employee has seen all official documentation and, if possible, ask them to sign the documents. This demonstrates that the employee knew what was happening.
Another important way to protect your business is to ensure your organization has a clear policy for discipline and termination of employment contracts. This needs to be written down, accessible to all those responsible for staff and staff alike.
It is also important that there are clear workflows that adhere to these policies. Straying from the policies can result in a lawsuit, so it’s important you document how you have followed those policies. You should also ensure staff have read and acknowledged their reading of the documents.
Finally, you should ensure any termination of an employee’s contract has a good reason that makes ‘business sense’. This should be documented, be aligned to policies and have supporting evidence.
Terminating an employee is usually not desirable. Hiring more staff to replace an employee can be just as much of a hurdle as firing staff. But sometimes it’s necessary. What you need to do is ensure you aren’t going to regret the decision with a time consuming and expensive lawsuit afterwards should you need to fire a member of staff.
Be sure to cover your brand and business with the right policies and documentation.
Do you have the right protection in place to protect your business? Do you have any tips for protecting your business from lawsuits from disgruntled employees who’ve been sacked?
As a reminder, the Professional Liability Insurance Group does not provide legal advice and strongly advises that every business seek appropriate legal and professional advice for all business needs.
Let us know in the comments.