Before you fire an employee at your small business, be prepared

As a small business owner you probably interview and hire employees personally. That personal involvement often makes the boss-employee relationships in a small business less formal, which means it can be awkward when you have to discipline staff or let someone go.

Large companies have a human resources department trained to handle hiring and firing employees. Without that luxury, small business owners have to tackle HR issues on their own. And if you don’t proceed with caution, you could have a lengthy and expensive wrongful dismissal suit on your hands.

Firing an employee may not be the most enjoyable part of owning a small business. But you can make it less stressful on yourself and your staff if you have a clear policy on behaviour that is grounds for dismissal and you follow a legally sound employee termination process.

Before you drop the axe on that underperforming employee, here are five things to consider:

  1. Make a plan. If you hire employees for your small business, you need to have a plan in place for firing them. This means preparing a formal termination letter (you can find templates online) and a document listing all the reasons why an employee would ever be fired. Turn that document into an employee handbook that you share with new hires so they’re clear about your expectations.
  1. Define employee roles. Write up job descriptions for each role that you hire for in your small business. Clearly define the job responsibilities for employees and the performance standards they’ll be judged on. Review these expectations with each employee individually. Give them monthly goals to hit and a quarterly performance review so you can both see where they’re on or off track.
  1. Keep a detailed record. Document all issues you have with employees. Write up each transgression or problem and date it to record what happened. You can also create a “paper trail” by writing up each issue in an email to the employee, who then has time to digest your message and make improvements.
  1. Suggest improvements. As soon as you’ve documented a problem, set up a meeting with the employee to discuss it. Be direct and professional – focus on the issue, not your feelings about it. Be transparent about the fact that they’re on the road to dismissal. But try to get to the root of the problem and what’s causing the employee to fail. With that understanding, you can outline specific actions the employee can take to improve. Give them a deadline for getting back on track, and support them with a plan to help them reach their goal.
  1. Prepare to take action. Once you’re clear that you need to fire someone, figure out your contingency plan by asking yourself how a person’s dismissal will affect your business. Will you need to replace them? How will the rest of your team react? Should you give them legal notice, or severance for immediate dismissal? What are your reasons for firing the person and are they legally sound? If you have a business lawyer, check with them about your legal obligations. Or review the information about firing employees provided by the Canadian Federation of Independent Business.

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