Facing Financial Losses and Poor Performance: How Should My Friend Approach Employee Termination?

My friend wants to terminate her employee on the basis of financial loss of the company. Her employee has not been performing well since 2020. Please suggest a better option for the termination:

Options for Termination

1) Performance basis
2) Financial loss

The company is facing losses during the COVID-19 lockdown.

Dear Yas@Cite.Co,

If the employee has not been performing to the desired level since 2020, have you given him any written warning? Nevertheless, before issuing the warning letter, have you provided him with the target to be achieved and the time frame for it? When and how did such communication take place?

Have the causes of the underperformance been studied? Does the employee need to rely on tools, machines, instruments, computers, etc., to meet the target, and if so, are these in working condition?

If the employee is underperforming, what support has his/her reporting manager provided? Is the manager taking underperformance nonchalantly?

There are many questions associated with underperformance. The general tendency is to pin blame on the employee and check him/her out. You may remove the employee, but ensure that he/she does not face injustice.

Your query was on exercising the choice between removal due to underperformance and financial distress. The choice is yours. However, make sure that the LIFO principle is followed if you wish to terminate an employee's services due to the company's poor financial condition.

Thanks,

*Dinesh Divekar*

Dear Colleague, I don't believe this forum is truly meant for advice on how to terminate services, which in industrial parlance is tantamount to "capital punishment." If you want to separate any employee, the win-win approach is to ask him or her to tender their resignation, pay notice pay, and let them go in good taste. By asking the relevant questions, a senior colleague has aptly pointed out possible wrongs on both sides, and that route of termination is fraught with legal tangles. If necessary, pay them some lump-sum compensation holding a carrot. This is to ensure preempting legal hurdles and also his separation by obtaining resignation on record is made to appear without any blot on their part.

Regards, Vinayak Nagarkar HR and Employee Relations Consultant

As you want to know the correct way to remove an employee, Mr. Dinesh and Mr. Vinayak have explained it very well. You cannot terminate an employee due to financial problems; you can retrench him with proper compensation. His underperformance has been well discussed by Mr. Dinesh.

Thanks,
S. Kumar

It is difficult to believe your pleas because the entire 2020 passed amidst shutdowns and lockdowns, and further, the financial loss cropping up due to one person seems like some kind of joke.

The termination at this point in time is not less than a sin; by this, a family would be completely destabilized. In my view, you should discuss with the boss of the employee to give some time to perform as per expectations. If things are not settled, you can terminate as per the termination grounds mentioned in the appointment letter (either ask him to resign or pay notice pay). The rest is left to your wisdom.