Thinking of dismissing an employee?

If employers are prepared, many difficulties can be avoided If employers are prepared, many difficulties can be avoided

Jay Bhayani

Thinking of dismissing an employee? Jay Bhayani, of Bhayani Bracewell HR & Employment Law offers some tips to protect your business.

I don't want to be the harbinger of doom, especially so soon after Christmas but the start of the New Year is the time to take stock of your workforce and decide whether you have the right people in the right jobs. The process of terminating someone's employment can be stressful and emotional. However, if employers are prepared, many difficulties can be avoided down the road.

Review Contracts & Documents

Employers should review all relevant documents prior to an employee's termination. Don't forget to check performance reviews and appraisals, historic disciplinary proceedings and warnings, letter of offer and contract of employment, Employee Handbook or Policies, non-competition or non-solicitation clauses. It is also important to evaluate any bonus or incentive plans, stock option agreements and employee benefit plan documents.

Regulatory Bodies & affiliations

Are you obliged to inform another body of the employee's departure? In some sectors there is an obligation to notify eg FSA or in my profession the Solicitors Regulation Authority. What about external Boards which the employee might participate in, will you be asking them to step down? For Directors make sure there is a resignation notified to Companies House for the records.

Reminder of legal obligations and restrictions

It is wise to remind the employee of any legal restrictions arising from the end of employment eg. restrictive covenants, confidentiality clauses, return of property and retention of IP. Think about how and when you will terminate access to the company's IT systems.

Calculate the final salary payment

Calculate earned but unpaid salary and loan repayments, commission and bonus payments and accrued but untaken holidays. Work out the correct notice payments and benefits owed and redundancy payment if appropriate. Doing this before the termination will sometimes affect the decision as to whether it is too costly to let the employee go.

Consider a Settlement Agreement

If the termination is a sensitive one or if there are no justifiable grounds to terminate, or if both parties agree, it is useful to tie things up within a settlement agreement. You can use this as a tax efficient way to make a termination payment and get agreement on things such as a reference and departure announcement to staff and externally to customers. A settlement agreement is well worth the small investment, get it properly drafted so it protects you so the employee cannot make a claim against the company. If the employee signs a settlement agreement you are not looking over your shoulder for a tribunal claim and can ensure confidentiality.

Words by Jay Bhayani, Bhayani Bracewell HR & Employment Law