PEOs Offer Objectivity and Consistency When Terminating Employees

To paraphrase the inimitable Chaucer, all good things must come to an end. This fact is as true in the relationship between employer and employee as in any other. Whether the termination of that relationship is voluntary or enforced however, will often determine if it is a“good” one or not. In any event, a prudent company or business owner will have a prescribed set of procedures that must be followed when terminating any employee.

The Dangers of Improper Employee Termination

Improperly terminating an employee can lead to several difficult situations. State governments have strict guidelines on employee terminations and non-compliance by your company can lead to a decision in the employee’s favor resulting in higher unemployment insurance premiums for you. Secondly, an employee not fired for just cause or arbitrarily terminated can lead to lawsuits that, however frivolous, must be defended. Lastly, terminated employees are always grist for the employee rumor mill. If any signs of uneven treatment are discovered, current employee morale will diminish and productivity will suffer.

Proper Procedures

Every responsible company has a set of prescribed procedures that delineate the proper way to counsel improper employee behavior or substandard performance. Failing demonstrable improvement by the employee, the company can then act to terminate the employee. This procedure should also be explicitly prescribed by the company and followed by management. Not incidentally, it is essential that all these procedures and disciplinary recourses be described in writing and disseminated to employees upon hire.


Documentation is king when it comes to employee terminations. Considerable effort must be expended to properly document not only the actual termination but also the events leading up to and causing it. Otherwise, any legal or governmental procedures will inevitably deteriorate into a “he said, she said” situation. Unfortunately, many managers, in the heat of the moment, neglect to execute these most important documents or to have a suitable witnesses present to attest to the proceedings. It is a bitter truth that, in the current economic climate, most businesses without the proper termination documentation will lose an unemployment hearing and have their rates increased.

The Aftermath

Most terminations are not unexpected by the employee. With well-designed procedures and proper implementation they will have been warned on numerous occasions. In any event, their state of mind after the fact is not that important to the business. Management should be mindful, however, about the thoughts of the remaining employees. Termination is stressful for everyone in the location. Many employees consider it a warning shot to them all while others become resigned to their, as yet unknown, fate. In short, terminations, regardless of the reason, are bad for morale. To counteract this effect, managers must maintain an even keel, not discuss the particulars of the termination and assure people that the termination was justified and performed according to company policy.

PEOs and Termination

Objectivity and consistency are the hallmarks to a properly implemented HR policy. While there are plenty of managers who can objectively counsel and terminate unsatisfactory employees, the vast majority allow some of their emotions to complicate the procedure. A
Professional Employer Organization simply does not have the same emotional investment in your employees. It is far easier for them to take a dispassionate look at a situation and make the right HR call.

A PEO will also ensure that your managers are following the right HR procedures from hiring through training until termination. This is an important benefit as every employee must be treated the same throughout their career or there may be a basis for a discrimination lawsuit. In addition, a PEO will document these procedures at every step of the process.

The final benefit of a PEO in an employee termination situation is that it gives management a certain degree of deniability. Employees are expected to follow company procedures and perform to a certain level of competence. Managers are expected to ensure that both of these goals are met. In the absence of compliance, a manager is simply acting in good faith by reporting the situation to the PEO which deals with it in an appropriate manner.

A Final Word

There is no “best” way to fire an employee although
PEOs can offer some excellent advice on the matter. Still, company management or the business owner must decide for themselves how, when and why an employee should be terminated. The best PEO will take that information, codify and document it and then ensure that it is objectively and consistently applied to every employee in the company. It is a win-win situation for the company and for the employees.

About the Author
Carolyn Sokol is a founder of which helps match small businesses with the right
PEO company for their unique business needs. Her background is in marketing and communications, employee education and training, development of policies and procedures and the ongoing delivery of outstanding customer service.