How to avoid Employment Litigation Risks when Terminating or Firing Employees

Termination or firing employees at work is a not-so-liked but mandatory process at business. All businesses big or small at time terminate or fire employee because of business compulsions. However, the recent downturn has accelerated the employee termination largely due to financial and performance problems.

Decision to fire an employee is never welcomed, however, there are some acceptable reasons for terminating an employee:

  • For poor performance at work or low productivity.
  • Being indisciplined or showing unethical behavior at work.
  • Not conforming to the company policy.
Above reasons are well accepted by other employees, business community and also by the legal framework of the country and states for growth of business.

Unfortunately, we also witness incidents of “unethical and unacceptable” terminations. These are neither acceptable by the communities nor by the legal framework. It is needless to mention that law has reprimanded such actions of the employers severely, whether they were intentional or unintentional.

It is unethical and legally unacceptable to terminate an employee -

  • On basis of sex, race, color, ethnicity;
  • On basis of medical disability;
  • On basis of religious faith;
  • On basis of pregnancy;
  • On base of age, etc.
The law says says that it is “illegal to discriminate in any aspect of employment, including hiring and firing”. Read more information on Unethical Discriminatory Practices.

Firing employees also exposes the organization to potential risks ranging from motivational to legal. Here are some of the common risks:

  1. Loss of Productivity: Whenever you fire an employee you risk the loss productivity of the organization. While it is possible to replace employees, there can be temporary decline in the organizational or departmental productivity. This amount of risk increases if the fired employee held a critical skill or competency required for a business process or project.
  2. Team De-motivation: Whenever an employee is fired or terminated, it is liable to cause distress at workplace at least within the team he worked. Terminations also raise unnecessary rumors at the water cooler.
  3. Cost of Rehiring: Whenever you fire an employee (unless for financial reasons or downsizing your organization), you need to rehire a replacement. Rehiring and training a replacement employee to reach the desired level of performance needs both time and money.
  4. Litigation Risks: Whenever an employee is fired, it is possible that she/he seeks legal advise. Thousands of employees every year seek legal protection in court for employment related discrimination. A simple google research can connect an employee to attorneys who are willing to provide free opinion on such cases.
Whosoever initiates it, employee termination is HR’s responsibility

While line managers are responsible for work and performance related issues, terminating an employee is primarily a responsibility of Human Resource Department. Whenever a manager or supervisor requests for termination of an employee, HR should critically analyze the case and find if it is a performance related issue, a discipline related issues or something else which is “undesirable” by law.

Checklist to ensure before a performance related termination.

  • Is performance of the employee evaluated according to company’s policy and procedures?
  • Is employee’s performance below his peers with similar capacity?
  • Has employee been notified about the poor performance in past and given enough time to improve performance?
  • Is the performance low because of some medical disability? Refer ADA Act for more information on Disability Rights.
Checklist to ensure before a discipline related termination.

  • Is the issue a discipline issue according to HR policy that leads to termination of employment?
  • Is there enough evidence for the act of indiscipline?
  • Has the indiscipline being recorded in employee file?
  • Was employee issued multiple warning letters for his act of indiscipline?
  • In addition, has the employee requested Time-off?
If the answer to above questions are NO, please reconsider the termination.

Studies reveal that some of the termination that lead to litigation were not intentional, but because of lack of information about the issue with HR. However, law rarely accepts the lack of knowledge as an excuse for violation.

Employee Data: A safeguard to HR If you maintain proper employee data like Job Descriptions, Performance Appraisal records, Employee Goal Sheet, Warning Letters, Incident Reports etc. that proves that you exhausted all efforts before taking a termination decision, you have created a firewall against potential litigation. Joseph Cleary, assistant legal counsel for the EEOC says that “Employers get into difficulties because they do not document performance-related problems. Then they get to the point where an employee’s performance becomes intolerable.”

Objective, data-based and process driven termination of an employee, arising because of business needs or disciplinary issues, not only saves your organization from internal embarrassment but also acts as a strong evidence if a disgruntled employee seeks legal counseling.

Collecting and maintaining employee data requires a significant investment in HR technology and time. An organization must start collecting employee data right from the day when employee applies for a job with the organization and maintain it as long as 7 years after the employee’s separation.


Presently working as a HR analyst and content writer. In this profile I need to research on best HR practices, understand how technology can help organization to improve performance of its human resources, optimize search engine to rank better in Google Search Results, write for the corporate blog, network with other HR professionals through various channels and develop one of the best on demand talent and performance management system- EmpXtrack.

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