What Is Employee Termination?

Employee termination refers to the formal end of the employment relationship between an employee and an employer. If we make it simpler, then we can say.

When an employee stops working for a company, it is called termination. Termination can happen for many reasons; it may be

1. Employee decides to leave.
2. The company decides to end the job.

Termination is a very sensitive topic. It affects emotions, careers, and company culture. If It is not handled properly, then it can create legal issues, a bad reputation and stress.

Why Is Employee Termination Important to Understand?

Many people think termination means only “firing someone.” Or asking to leave the company, but it is not true.

Termination has a vast topic, and it covers.

• Resignation
• Retirement
• Contract ending
• Layoff
• Termination due to performance or misconduct

Understanding the terminology termination is important to us, as it covers.

• Company legacy
• Employee rights
• Maintains Workplace respect
• Avoids future disputes

If we made a smooth termination, then it indicates that the company follow the professionalism and considers humane emotions.

How many types of Employee Termination

I have covered here 8 types of Termination/Resignation. It will clear all your doubts. And you will be able to understand the exact scenario and will be able to deal with the situation as per the circumstances.

1. Voluntary Termination (Employee Leaves by Choice)

As the words themselves reflect by Choice, yes, you understand it correctly if an employee leaves the organisation by his choice or based on his decision, then it comes under Voluntary Termination, there might be various reason.

Common Reasons:

• Good job opportunity
• Getting a higher salary outside
• Good Career growth Opportunity
• Personal reasons
• Health issues
• Relocation to a different City.
• Decided to Pursue Higher studies
• Not getting Work-life balance

Above all, resignation is a normal separation and its part of any Organisation.

Hence, HR Role if very simple and acceptable, once the employee puts down his paper then HR roles start here as below.

1. Accept Resignation
2. Check notice period to be served
3. Conducting the Exit Interview
4. Processing the Full and Final Settlement, considering payable days and other pending pay-out.
5. Issuing the Experience and Relieving letter

2. Involuntary Termination (Company Ends Employment)

The more sensitive and risky when the employer decides to terminate the employee because of xyz reasons. It happens when an employee is doing his duty with full motivation and diligence, and suddenly he or she receives notice where employer has decided to terminate the employment.

As I said, this is a very sensitive and risky case where emotion also comes, so as an HR have to deal with a plan strategy considering every aspect of the employee as well as the employer.

There are some reason which leads such type of Involuntary termination.

Common Reasons:

1. Poor Performance
2. Any misconduct by Employee
3. Policy Violation
4. Fraud/Theft by employee
5. More absenteeism
6. Lay of (Company Business Reason)

3. Termination Due to Employee’s Poor Performance

Every employee is assigned a specific task, and he/she is responsible and accountable. Company expect that the employee will perform this task with diligently, but sometimes due to some reason employee does not meet the expectations. 

This happens when an employee:

• Does not meet job expectations
• Repeatedly misses the targets
• Shows no improvement after warnings

Point to be noted!

The company can not terminate the employee suddenly for their poor performance there are some steps that HR has to take in place, otherwise it will become non-compliant and create a big risk for the company. An employee should not be terminated suddenly for poor performance.

The Correct Process which HR should follow.

Step 1: Inform the employee about their performance verbally

Step 2: If there is no improvement, inform in written on mail or by letter.

Step 3: In the third process, keep the employee in the PIP (Performance Improvement Plan)

Step 4: After PIP tenure might be 3 months or 4 months if the employee meets the expectation. HR can decide to either continue the employment or ask to leave the organization.

4. Termination Due to Misconduct

Again, this is a very vast topic which cover diffrent types of misconduct by employees at work place. Here misconduct means behaviours misconduct like.

1. If any employee involve in Theft
2. Done any Fraud might be in day to day transaction
3. Physical violence
4. Sexual harassment for which we have POSH policy
5. Serious policy violation
6. Data leakage

However, if any employee is involved in such behaviors misconduct, then HR must follow disciplinary procedures, because an immediate ask to leave without doing any inquiry can create a legal trouble for the organization.

The Correct Process which HR should follow

• Issue show-cause notice to involved emploiyees
• Conduct a domestic inquiry
• Give employee chance to explain the matters
• Keep evidence of each tiny thing and notice them
• Post discussion Pass reasoned order

6. Termination Due to Absenteeism

If an employee is continuously absent and not joining the duty, then the work get hamper. To handle such cases Absenteeism attendance should always be documented and captured correctly.

if an employee has below behaviors or similar to this.

• Remains absent without approval or without informing the immediate boss
• If you try to connect then it does not respond to calls or emails
• Disrupts and do not follow the attendance policy

The Correct Process which HR should follow

• Issue Warning letters and send to employee
• Notice him to report back
• If still not response the  send Final termination letter

7. Termination Due to Layoff or Retrenchment

A layoff means if an organization temporarily or permanently stops hiring workers due to reasons like business loss, cost-cutting, or restructuring. It is not usually considered an employee’s performance.

Generally layoff happens in below scenarios.

• Company running with financial loss
• Business get down
• Company loose Project and get it closes
• Company do any restructures

Let me clear Layoff is not employee’s fault.

If company do lay off then what are the Employee Rights:

• Notice or pay in lieu to employee
• Pay Retrenchment compensation describes as per law
• Gratuity (if Applicable and employee is Eligible

HR must handle this Layoff with respect and transparency.

8. Termination Due to Contract Expiry

It is not a termination of an employee or firing to employee, it is as simple as the employee has hired for a specific term and tenure and after completion of tenure employee has to leave the organization.

Employees are being hired for work on:

• Fixed-term contracts
• Project-based roles

When the contract ends, then employment automatically ends. This is legal as the terms are followed.

9. Termination During Probation Period

Probation is a trial period at the start of a job when an employee’s performance, behavior, and skills are evaluated. During this period, confirmation of the job depends on meeting company expectations.

During probation:

• Company checks employee suitability
• Notice period is usually shorter

Can a probation employee be terminated?

Yes But:

• Reason should be genuine
• Discrimination should not exist

Employee Rights During Termination

Here is some right which Every employee should know.

• Notice period or salary
• Salary till last working day
• Leave encashment
• Gratuity (if eligible)
• PF and ESI benefits
• Experience letter
• Relieving letter

In Termination statutory dues never can be hold.

Employer Rights During Termination

Similarly employer has also some right to handle the Termination with fairly, legally and Humanely.

• Enforce company policies
• Terminate for genuine reasons
• Take disciplinary action
• Protect company interest

How HR Should Handle Termination Professionally

HR has the most important role for sooth handling the termination, it should be professional.

• Keep documentation strong
• Communicate clearly
• Avoid emotional language
• Follow company policy
• Maintain dignity
• Be calm and respectful

How to Communicate Termination to an Employee

The most sensitive action or duty of HR is communicating the employee for the termination. Sometimes it seems very painful and is full of emotions.

What An HR should follow Do’s:

• Be clear and polite
• State reason briefly
• Explain next steps
• Allow employee to ask questions
• Be respectful

What An HR  should follow Don’ts:

• Do not insult
• Do not shout
• Do not threaten
• Do not argue

Simplest Termination Conversation

We appreciate your efforts.
However, due to continuous performance issues despite support, we have decided to end your employment.
This decision is final.
HR will explain your settlement process.”

Simple, clear, professional.

Termination Letter – matters a lot because of the following points

A termination letter is a legal document; HR should follow and keep the records, the document should include because unethical termination cause court cases.

• Employee name
• Date
• Reason (brief)
• Effective date
• Notice details
• Authorized signature

Exit Process After Termination

Post Termination after sending the termination letter have to follow the exit process.

Remember Good exit always creates good employer brand.

• Hand over company assets
• Knowledge transfer (KT)
• System access removal
• Full & final settlement
• Documents issuance

Emotional Impact of Termination

Termination has very emotional aspect as employee is seprated from the orgnastion with great memory. Employee might be the only earning person of his family so post that termination he or she can face the financial issues. It affects in may way.

• Effect on employee Confidence
• Employee’s Mental health
• Employee Family life

So an HR and managers should take care such things and follow the termination considering the below aspect.

• Show empathy towards employee
• Avoid humiliation
• Offer support if possible

Some Common Mistakes Company should not do During Termination

• No documentation
• Sudden firing
• Emotional decisions
• No inquiry
• Withholding salary
• Threatening language

These mistakes invite legal and reputational damage.

Can Termination Be Challenged?

Yes, sometime termination become a challenged, as in many cases employee approach some big steps in such termination cases if they are not satisfied.

• HR escalation
• Labour office
• Labour court
• Legal advisor

Difference –  Employee Termination vs Resignation

The Necessary Importance of  Documentation in Termination

The document should be there for smooth termination.

• Appointment letter
• Warning letters
• PIP records
• Inquiry reports
• Attendance records
• Policy acknowledgements

How Termination Impacts Company Culture

Bad termination: Here i have listed some impact of unethical or bad terminations.

• Creates fear
• Reduces trust
• Increases attrition

Good termination: Yes,good termination cover a entire gamut of employee Lifecyle

• Builds respect
• Shows fairness
• Improves discipline

Employees always watch how others are treated.

Termination and Employer Branding

Today, employees share experiences on:

• LinkedIn
• Glassdoor
• Social media

One bad termination can damage:

• Hiring
• Reputation
• Trust

What Employees Should Do After Termination

See, Termination is not the end of a career, everything happens for a reason.

• Stay calm
• Understand reason
• Collect documents
• Update resume
• Learn from experience
• Move forward