How to terminate an employee properly

Know which kind of termination it is

Each type follows a different path, and mixing them up is a common source of disputes. Calling a role cut 'performance' to avoid paying compensation, or dismissing someone for misconduct without an inquiry, both create problems later. Name the type first, then follow its process.

• Misconduct: theft, fraud, violence, harassment or serious safety breaches, handled through your disciplinary process
• Performance: continued failure to meet standards after feedback and an improvement plan
• Retrenchment: the role is no longer needed, through no fault of the employee
• End of a fixed term: the contract ends on its stated date
• Probation: not confirmed, handled under the probation terms

Due process for misconduct

For misconduct, follow the steps in your standing orders or disciplinary policy. Usually that means a preliminary check of the facts, suspension pending inquiry where the policy allows, a show cause notice listing specific charges, time for a written reply, an inquiry by a neutral officer where the case is contested, written findings, and disciplinary action in proportion to the misconduct. Skipping steps to save time is the most common reason terminations are later challenged.

Notice, compensation and final dues

Give the notice in the appointment letter, or wages in lieu. For retrenchment of a worker with at least one year of continuous service, the Industrial Relations Code requires one month's written notice with reasons, or wages in lieu, plus compensation of 15 days' average pay for each completed year of service; see the notice and termination rules. Pay final wages within two working days of the exit date. Add gratuity where the person has five or more years of continuous service, and leave encashment as per your policy.

The termination meeting

Hold it in private with the manager and HR, and keep it short. State the decision first, then the main reasons in two or three sentences. Do not debate the decision. Hand over the letter, explain the last working day, final dues, property return and access, and let the person collect their belongings with dignity. Escort someone out only if there is a real security risk.

• Evidence, notices and the employee's replies
• Inquiry report and findings, where held
• Approval of the decision
• Termination letter with the employee's acknowledgement
• Settlement statement and proof of payment
• Relieving letter copy

Step by step

1. Identify the type and gather evidence. Decide whether the case is misconduct, performance, retrenchment, end of term or probation, and collect the documents that support it.
2. Check the letter and standing orders. Read the appointment letter's notice terms and the standing orders or disciplinary policy that apply to this employee.
3. Follow due process. For misconduct, issue a show cause notice, allow a reply and hold an inquiry where needed. For performance, make sure an improvement plan was run and documented.
4. Get the decision approved. Have the HR head and the business head approve the decision, the reasons and the settlement before anyone meets the employee.
5. Prepare the letter and the settlement. Draft the termination letter with reasons and the effective date, and calculate notice pay, compensation if retrenched, wages and other dues.
6. Hold the termination meeting. Meet privately, state the decision and reasons briefly, hand over the letter and explain the next steps calmly.
7. Record the exit. In ZeniaHR, start offboarding with the structured exit reason and complete the 8-item exit checklist, including property and access.
8. Pay dues within two working days. Pay wages, notice pay, compensation, gratuity and encashment as applicable. In ZeniaHR, an off-cycle payroll run settles dues without waiting for month end.
9. Issue the relieving letter and file records. Give the relieving letter once clearance is done, and keep every document from the process in the employee's file.

Frequently asked questions