How to terminate an employee for poor performance

Terminating an employee is never easy, but there are some cases of employee termination that are especially difficult to handle. This includes termination for poor performance. Among all the causes for employment termination, poor performance is a particularly tricky one because it’s hard to justify objectively.

What pitfalls do businesses have to avoid when terminating an employee for underperformance? Is poor performance a just cause for termination? What does an employment termination letter for poor performance look like? Here is everything you need to know about how to terminate an employee for poor performance.

The first thing managers and business leaders need to know is what is actually meant by poor performance. In the most general sense, poor performance means that the employee doesn’t meet the requirements that are described in his or her employment contract and fails to perform the tasks in a manner that fulfills the expectations of his or her position.

Examples of performance issues employees might face are:

• Poor prioritizing and task management,

• Untimely completion of assignments,

• High frequency of errors,

• Customer dissatisfaction with services provided by the employee, and

• Inappropriate work methods.

In any case, employers must distinguish between poor performance due to lack of capability (i. e. employee fails to perform up to standard despite his or her best efforts) or due to misconduct (i. e. employee displays poor performance although he or she is able to perform better).

Terminating an employee whose performance is not up to standard should be your last resort. Try the following tips first before you consider terminating an underperforming employee:

• Communicate expectations clearly: If expectations aren’t clear, it’s hard to fulfill them. Make sure your employees know exactly what is expected of them and then see if their performance changes.

• Review the job description with the employee: The job description and the employment agreement should clearly outline the roles, responsibilities, and expectations that are linked to the employee’s position. Reviewing both documents can help identify areas where the employee falls short.

• Provide the right tools: Having access to the right tools can make a huge difference when it comes to employee performance. Whether it’s a software tool or a laptop with a fast processor that can manage multiple large programs at once, your employees should be equipped with everything they need to perform well.

• Document the employee’s underperformance: For employees who are unaware of their lack of performance, it can be hard to understand what they are doing wrong. Before you approach them, write down some specific examples and instances of their underperformance.

• Implement a performance improvement plan: Improvements in an employee’s performance can’t be achieved overnight. A performance improvement plan can help you identify skills and knowledge gaps in your employee and map out a path to close these gaps.

• Offer support: Before disciplining your employees, try to act as a mentor and show them ways for working more efficiently. Also check whether the employee in question has received the necessary onboarding to manage the tasks and responsibilities that are linked to his or her position.

Whether poor performance is a just cause for termination or not depends on the laws that govern the employment relationship. Every jurisdiction has different rules regarding employee termination, including what counts as a valid reason for employee dismissal.

In countries like the United States that operate with an “employment at will”-system, any dismissal reason that is not based on discrimination is lawful. Most other countries have detailed rules and regulations in place that apply to employment termination, including whether or not poor performance is a just cause for dismissal.

In most countries, an employee’s lack of capability to perform his or her job in line with company standards and expectations is part of the legal grounds for termination. However, the regulations differ with regard to what actions an employer needs to take before resorting to termination and what counts as reasonable time or opportunity for the employee to improve his or her performance.

The termination meeting should be kept short and professional. Also, make sure to conduct the meeting in a way that none of the employee’s rights get violated and that he or she can leave the organization in a dignified way.

Nevertheless, it’s important to get to the point and clearly express why the employee is being fired. Continuous underperformance can have negative repercussions on the rest of the team and even across the entire organization, leading to frustration, resentment, and possibly to higher employee turnover.

Finding the right words when terminating an employee for poor performance is hard, even for the most seasoned managers. Here are a few tips that can help you get through the termination meeting without things getting out of hand:

• Don’t discuss the employee’s personal traits.

• Ban any emotions from your speech.

• Ignore the urge to apologize to the employee.

• Don’t be tempted to offer a second chance.

• Avoid comparisons with other employees.

• Stay calm and determined even when emotions run high.

Dismissing an employee for bad performance can be tricky. It’s therefore especially important to handle the process with confidence from start to finish. Here is how to dismiss an employee for poor performance step by step.

• Have your documentation ready: All the documentation you prepared upfront for managing the employee’s poor performance will come in handy when termination becomes inevitable. Make sure you have all the interventions, meetings, and other means by which you tried to help the employee improve his or her performance documented.

• Schedule a meeting with the employee: The next step is to invite the employee to a meeting in which you communicate your decision to terminate the employment relationship. Make sure to invite another member of the leadership or management team to the meeting to have someone who can back you up.

• Conduct the meeting in a professional manner: Termination meetings are always unpleasant for both sides, but especially so when an employee is terminated for poor performance. Keep it professional and tactful so that the employee can leave with dignity.

• Hand the employee his or her termination letter: A letter of termination is a formal part of any termination procedure, also in cases where the dismissal reason is the employee’s performance.

• Manage the offboarding properly: Employee offboarding is almost as important as the onboarding process. The offboarding should include a proper exit interview and several administrative tasks, such as removing the employee from your payroll and deactivating his or her credentials for company systems.

• Check for any severance pay requirements: Despite being dismissed for poor performance, the employee might be entitled to severance pay. To avoid any legal claims or other issues, double-check the employment agreement to be on the safe side.

Lano Blog

How to manage severance pay for global teams

Read more

A letter of termination is a key component of the termination process. It is the official document that seals the employee’s dismissal. Whenever you write a termination letter, you need tact and precision to find the right words that get to the point while respecting the employee’s rights and dignity. This is of particular importance in cases of termination for underperformance.

A termination letter to an employee for poor performance should include:

• Professional heading with your contact information and the details of the employee,

• Reason for the termination supported by concrete examples of the employee’s underperformance,

• References to verbal and written warnings issued to the employee,

• Reference to the performance improvement plan,

• Mention of severance pay and benefits payouts (if applicable), 

• Description of future steps, such as offboarding, and

• Professional closing.

Businesses that fail to manage employee termination properly open themselves up to wrongful termination lawsuits and potential retaliation from dismissed employees. In cases of employee termination for poor performance, this risk is particularly high.

In order to mitigate any risks and protect the business’s integrity, managers and business leaders should adhere to the following best practices:

• Documenting evidence of the employee’s underperformance,

• Establishing and following through with a performance improvement plan (should also be documented),

• Avoiding criticism directed at the employee’s personality, 

• Respecting any existing requirements regarding severance pay,

• Preparing a detailed separation agreement, and

• Having a second person assist in the termination meeting.

There is no definite answer to the question of how to terminate an employee for poor performance because the rules and procedures differ from one country to the next. International organizations that work with a global team therefore need to be very cautious when planning to dismiss an underperforming employee.

Aspects that need to be double-checked before dismissing an employee for performance issues in another jurisdiction include:

• Severance pay requirements,

• Notice period,

• Probation period,

• Employee length of service,

• Regulations on how long to give the employee to improve and what guidance to provide,

• Legally required number of written warnings or similar,

• Legal grounds for employment termination for poor performance, and

• Need for objective evidence of the employee’s underperformance.

To avoid litigation, businesses looking to terminate an employee abroad should work with a trusted employment law expert who can advise them on potential pitfalls and how to avoid them. This could be an Employer of Record (EOR).

An Employer of Record can handle all things employment for you in foreign markets, from hiring and onboarding employees to distributing payslips to employee termination. Use Lano’s global network of trusted EOR partners to compliantly hire and manage employees in more than 170 countries all over the world. Book a demo with one of our experts to learn more.

Lano Blog

How to terminate employees abroad

Read more