Termination of employment based on performance

In recent days receiving more queries regarding termination of employees based on performance and HR folks were not clear about the procedures to be followed for both blue collar and white collar employees. In the below article with my IR experience and with the reference of few websites i am trying to bring down few things on the subject of termination of employment based on performance.

The employees who are covered under the definition of “Workman” as per Industrial Disputes Act 1947 are referred as blue collar employees.

The employees who are in the managerial or administrative capacity or in a supervisory capacity drawing wages exceeding INR 10,000 (approx. USD 156) per month are referred as white collar employees.

Termination of blue collar employees is defined in Industrial Disputes Act 1947 which clearly indicates the procedures like 30 to 90 days of notice or payment in lieu of such notice, 15 days of payment for every completed year of service as compensation, prior approval from appropriate government in case of 100 or more workman.

Termination of white collar employees for cause does not include non-performance, it includes only behaviour which qualifies as misconduct. The following are the suggested things which may be carried out while proposing termination based on performance.

Step 1: Role Clarity – Set Standards

We are perceiving that employees will understand the role based on their professional experience but it’s the role of HR and line manager to explain the role and culture of the company.

• Make the employee to understand the expected level of output or performance and the expected behaviour at work place.
• Good practise is to provide regular performance feedback and inform if any changes required in work or behaviour. (Friendly approach will be appreciated)
• It’s the responsibility of HR to make sure the supervisors and line managers are trained to handle unsatisfactory performance or behaviour.

Most of the performance and behaviour issues comes due to poor understanding of the role and results expected from them.

Step 2: Monitor and Counsel

• Identify the challenges faced by the employee in achieving the set standards and provide support
• Map what went right and what went wrong which has impacted the results and speak with employee to ascertain your assessment
• Explain your intention in relation to continuing their employment and importantly set clear plans for the employee to follow in order for him to improve. This might include providing training.

HR should create records for all the meetings and it is better if employee also acknowledges the same.

Step 3: Written Warning

Provide written warning letter for the unsatisfactory performance or behaviour and the letter should include the following:

• Purpose of the position
• Narrate the issue (expected performance / behaviour)
• Set plan and time limit for improvement
• Consequences if not improved (Extension of probation/Termination etc.)
• Employee acknowledgment

Step 4: Preparation for Termination

If the employee has not improved after all the above steps, it’s high time for the employer to conclude the employment contract. Should seek for an internal approval from the Management for safer side stating all the steps carried out before initiating the termination. If we decide to terminate an employee employment the following need to be ensured.

• Check the terms and conditions of employment
• Substantiate documents available to establish as non-performer
• All documents of the above steps to ensure smooth reliving

The letter of termination should include:

• Outline the reason for the termination
• Refer the terms & conditions for termination mentioned in appointment letter
• Specify the notice period or payment in lieu of notice period
• Mention the last date of working and handing over procedures

Step 5: Relieving the employee

The above advised steps to be scattered for 3 to 6 months and employee also should mentally prepared to accept the separation and it is the HR role to make him understand the importance provided for him in the organisation.

The reason for termination of employment should be explained in detail to the employee and HR should be a good listener during separation process. The employee should be given enough opportunity to explain his point of view and employers also should get the feedback from the exit employees.

The feedback provided by the employee founds valid, should be considered as improvement point in the organisation and should not underestimate any individuals who leaves the company.

HR should ensure that employee gets relived peacefully without any hard feel from the peers and supervisors.   

It is important to carefully explain the information in the letter of termination of employment and ensure that the employee understands and acknowledges.

You should keep a copy of the letter of termination of employment for your records.

Thank you

Regards,

S.Velpandiyan