How To Fire an Employee: Your 10-Step Guide (in 2025)
It can cost up to $100,000 in legal disputes if you get this essential HR practice wrong. Knowing how to fire an employee legally can help your organization avoid costly mistakes. And give you the confidence to navigate the difficult process of terminating an employee.
There is one task that can challenge even the most experienced HR professional: how to fire an employee in a professional and compassionate way. It requires advanced skills in communication, emotional intelligence, conflict resolution, and crisis management, as well as knowledge of employment laws and regulations.
HR professionals not only have to manage the challenging aspects of terminating an employee but may also need to support managers. Around 71% report feeling uncomfortable with the termination process.
Does firing someone ever get easier? Probably not. However, having the right strategies can make the process fairer and less stressful for everyone involved.
Contents
Reasons to fire an employee
How to fire an employee professionally in 10 steps
Dos and don’ts when firing an employee
Reasons to fire an employee
Before terminating an employee, make sure your decision is valid and well-documented, following your organization’s termination policy and employment laws. Some common legal reasons that may justify termination include:
1. Poor performance
Employees who consistently underperform despite receiving constructive feedback, support, and time to improve may not be a good fit for the role. Ensure that poor performance has been clearly communicated and well-documented.
- Example: Grounds for dismissal could be a sales representative who consistently misses monthly targets. Although they have been given ample training and over six months to improve, their performance remains poor.
2. Sexual harassment
Sexual harassment is a serious violation that can lead to immediate termination. HR should thoroughly investigate any allegations, and if the misconduct is confirmed, the employee may be dismissed.
- Example: An organization with a zero-tolerance policy may fire a supervisor for making inappropriate advances toward junior team members.
3. Theft or fraud
Stealing or engaging in fraudulent activities can cause serious financial harm to an organization, its clients, and its overall reputation.
- Example: A hedge fund manager who has been embezzling funds from his clients. Not only are there grounds for termination, but they can also lead to legal action against the employee.
4. Safety violations
Repeatedly violating safety protocols, even after several verbal and written warnings, can pose a serious risk to the employee, their colleagues, and the organization. It’s important to document each violation and the resulting disciplinary measures.
- Example: A warehouse worker who has been involved in two accidents due to reckless forklift driving, resulting in injuries to both themselves and a coworker.
5. Attendance issues
Employees who are frequently late or have multiple unexcused absences can negatively impact the team. It’s important to discuss these issues with the employee to see if there’s a valid reason. If none is found, they should receive verbal and written warnings.
- Example: A project manager has been consistently late for the past six months, causing significant delays to important projects. Despite receiving three written warnings, the behavior hasn’t changed.
6. Substance abuse
Using drugs or alcohol at work or having a substance abuse issue that affects performance or safety is a serious offense. Offering support, such as providing the opportunity for treatment, is a compassionate approach. In some cases, employers may be required to do so, like under the Americans with Disabilities Act (ADA), which recognizes substance abuse as a disability.
- Example: A school teacher who refuses to seek help for an alcohol problem could be terminated, as their behavior puts students at risk.
7. Disrespectful behavior
Employees who show disrespect toward authority, ignore company rules, or engage in insubordination can create significant issues.
- Example: An IT manager who deliberately disregards security protocols demonstrates insubordination, which also poses a serious security risk.
It’s important to note that all states (except Montana) allow for “at-will” employment. An employer can terminate employees for any reason (or no reason). However, firing an employee for illegal reasons is prohibited, including:
- Discrimination based on race, ethnicity, religion, gender, sexual orientation, age, or disability is not allowed. If proven, it could lead to lawsuits and fines
- Retaliation against an employee for reporting harassment, discrimination, security violations, or whistleblowing on illegal company activities is prohibited
- Taking legally protected leave, such as medical or parental leave, under laws like the Family and Medical Leave Act (FMLA) cannot be grounds for termination
- Firing an employee for exercising their legal right to join or participate in labor union activities would violate the National Labor Relations Act.
Learn how to navigate complex HR challenges
Handling employee terminations with professionalism and compassion is one of the most difficult tasks HR professionals face. Developing the right strategies and communication skills is key to managing this process effectively.
In AIHR’s HR Manager Certificate Program, you’ll learn essential skills for managing difficult HR situations, improving employee relations, and ensuring legal compliance in your day-to-day operations.
This online, self-paced Certificate Program will also offer practical guidance on conflict resolution, crisis management, and strategic decision-making that supports both your organization and its people.
How to fire an employee in 10 steps
How can you ensure that terminating an employee is done in a professional (and respectful) way? Follow a structured process, such as these essential steps:
Step 1: Prepare the necessary documentation
- Carefully review all relevant documentation that supports the reasons for termination, such as poor performance reviews, warning letters, and disciplinary actions.
- Double-check your organization’s termination policy to ensure you have valid reasons and all the necessary documentation to terminate the employee.
- Prepare a termination letter that outlines the reasons for termination, last day of employment, severance or final pay, and the continuation of health coverage (COBRA), if applicable.
Step 2: Consider potential legal complications
- If in doubt, consult with a legal representative to ensure the reasons for termination are valid. Share all supporting documentation with them.
- Check that the employee has not filed any recent complaints. This step can help prevent any claims of unlawful discrimination or retaliation.
- If there is a potential for legal disputes, consider other alternatives to termination, such as reassignment or giving the employee more time to resolve issues.
Step 3: Conduct the termination meeting
- Choose a conducive, comfortable, and private setting. Have a witness in the room, such as the employee’s manager or other HR representative.
- Communicate the reasons for termination, highlighting the supporting documentation. Keep it short, be direct, and avoid a lengthy discussion.
- Be empathetic by listening and answering the employee’s questions. However be clear that the decision is final, outlining the next steps in a simple checklist.
HR tip
Before the termination meeting, roleplay with the manager or another HR representative. Practice your responses to some challenging questions an employee may have. It can be helpful to create a script of what you might say in different scenarios. Taking the time to practice can ensure you stay focused and to the point, avoiding missteps that could lead to legal disputes.
Step 4: Provide support and resources
- Depending on the nature of the dismissal, offer access to support services such as counseling, coaching, or job assistance.
- If an employee is not being dismissed for gross misconduct, offer to provide them with a reference letter.
Step 5: Organize post-termination procedures
- Update the employee’s employment record with the notes from the termination meeting, including the termination letter, severance package, or any other relevant documents.
- Inform relevant stakeholders of the employee’s termination, such as payroll, IT, security, and department heads.
- If not prepared in the termination meeting, arrange for the employee’s final paycheck or severance payment, as well as information about unemployment benefits (if the employee is not terminated for misconduct).
Step 6: Follow up with the employee
- If the termination is not immediate (as in gross misconduct), schedule a follow-up meeting to check in with the employee and answer any remaining questions they may have.
- Share any information about available resources such as counseling and job placement services.
- Review the final checklist to ensure the employee has followed necessary procedures, such as returning company equipment or sensitive information.
Step 7: Maintain employee’s privacy
- Do not discuss the termination details with the employee’s team members or other employees unless absolutely necessary.
- Avoid mass electronic distribution of the employee’s records and any documentation related to the termination.
- Respond professionally to any reference requests you may receive unless the employee is terminated for a serious offense or misconduct.
Step 8: Be prepared for the last day of employment
- Check that the employee’s access to computer and security systems has been revoked and all company property has been returned before they leave.
- Arrange for the employee to be escorted out discretely and respectfully.
- Finalize any outstanding documentation, including the date and time of termination, final tasks completed, and any other necessary transition details.
Step 9: Conduct a final review of the termination process
- Schedule a meeting with the manager and any relevant team members to review how the termination has affected workflows, morale, or any other issues.
- Conduct an internal HR review to identify areas for improvement, such as communication, payroll, or other key HR processes.
HR tip
Consider having a short exit interview with the terminated employee. It could offer you with valuable feedback on how the termination process was conducted, giving the employee an opportunity to express any issues or share suggestions. Extend the offer, letting the employee know it is voluntary and any information shared will be confidential.
Step 10: Communicate with relevant employees
- Support the manager or senior leaders in how to communicate the employee’s termination after they have officially left the company.
- If the termination involves serious misconduct, arrange for group meetings or company-wide meetings to address the issue and answer any questions openly.
Although every situation will be different, following these steps will give you the structure you need to ensure the termination process is professional, legal, and respectful.
How much does it cost to fire an employee?
The exact costs for terminating an employee will depend on the individual case, and can vary from different states or regions. However, here is a list of potential expenses:
- Severance pay: Depending on your company’s termination policies and the tenure of the position, you may have to offer a severance package, which could include a lump sum payment of 2 to 6 weeks’ salary. Please also review any state severance pay requirements.
- Unemployment insurance tax rate: If the employee is not terminated for serious misconduct, they may be eligible for unemployment benefits (which employers have to pay). An organization’s insurance premiums could potentially increase with the number of claims filed by former employees.
- Replacement and hiring costs: According to recent data from the Society of Human Resource Management (SHRM), the average cost of hiring a new employee is about $4,700. However, total costs could be up to three to four times the position’s annual salary.
- Legal fees: If a termination leads to disputes, wrongful termination lawsuits, or requires navigating labor laws, legal fees can add up quickly.
Here is an estimate of the potential costs involved in terminating a software engineer who has been with a company for four years, earning $175,000 per year.
- Severance pay: Based on the company’s standard severance package of two weeks’ pay per year worked:
- 4 years x 2 weeks/year x $175,000/year = $14,000
- Unemployment insurance: Assuming a rate of 1.5% of the employee’s weekly pay:
- Weekly pay: $175,000/year / 52 weeks = $3,365.38
- Unemployment insurance cost: 1.5% x $3,365.38 = $50.48 per week
- Over an estimated 20 weeks of unemployment: $50.48 x 20 weeks = $1,009.60
- Hiring costs: In this case, the estimated costs for hiring a new software engineer would be around 1.5x the annual salary:
- $175,000 x 1.5 = $262,500
- Onboarding and training: To minimize time to productivity, the new software engineer receives a comprehensive onboarding, costing $8,000.
- Total estimated costs: $14,000 (severance pay) + $1,009.60 (unemployment insurance) + $262,500 (hiring costs) + $8,000 (onboarding) = $285,510.
Dos and don’ts when firing an employee
Dos
- Have a sufficient cause for termination: Carefully review the employee’s performance records to ensure there is enough supporting evidence for termination, such as written warnings, performance improvement plans (PIPs), and disciplinary reports.
- Choose the right time and place: Try to schedule the meeting early in the week, allowing the employee time to process the news and get any support they need. Avoid firing an employee at the end of the day, on Fridays, or before holidays, as support services may be unavailable. Also do not terminate employees on parental or medical leave because of the legal protections.
- Keep termination meetings short and to the point: Provide a direct and straightforward explanation of why an employee is being terminated. Along with the supporting documentation, summarize the situation without engaging in a long discussion. Be empathetic in answering their questions, but emphasize that the decision is final.
- Avoid the element of surprise: Being fired should never come as a surprise to the employee. Ensure they have received multiple verbal and written warnings. Employees should know that termination is possible if they do not improve. Conduct on-the-spot dismissals for serious misconduct only. If not, it could result in legal disputes.
Don’ts
- Delay the decision: Once there is enough cause for termination and the employee is aware of their performance issues or misconduct, do not put off the termination process. A delay could lead to low productivity, morale, or mistrust in the organization for allowing employees to continue working.
- Fire the employee without a witness present: To help prevent legal issues down the road, always include a witness in termination meetings. Often, this is someone from human resources or the manager. Before the meeting, brief them with supporting documentation. Ensure you take notes and have the witness confirm the final record of the meeting.
- Humiliate the employee: It is crucial to treat the employee with respect during the process. If possible, meet with them individually and face-to-face, avoiding mass firings via email or video conferencing. Having a respectful approach also helps maintain the morale of other team members and avoid any negative impact on your employer brand.
- Discuss the termination with other employees: Maintain the privacy of the terminated employee. Do not share the details about their termination with their colleagues or other employees. This practice can help maintain the employee’s dignity and overall professionalism of your organization.
A final word
Although each termination experience will be different, these essential strategies can help you create a similar structured process. One that is not only professional, ethical, and legal but also compassionate and respectful. A well-delivered termination experience can prevent a negative impact on both the individual and the organization.
Learn more
Related articles
Are you ready for the future of HR?
Learn modern and relevant HR skills, online
