Here’s Why Your Business Needs a Termination Policy

February 18, 2021

A termination policy is an official document that lays out the grounds and process for firing employees. Most states don’t require employers to have a termination policy, but it’s still a good idea to develop one, no matter how many employees you have.

“Almost across the country, employment is at will, which means employees and employers can terminate relationships anytime with or without notice,” Domenique Camacho Moran, a partner at ‎Farrell Fritz, told Business News Daily. However, “employers can’t fire someone for unlawful reasons, including gender, religion, race, ethnicities and [in some states] political activities.”

Why should you develop a termination policy?

Wrongful-termination lawsuits. Even when employment is at will, business owners can still be susceptible to lawsuits. Wrongful-termination suits are plentiful in the U.S., and they can be very costly for businesses. If a business doesn’t have an employee termination policy or documentation of the reasons for firing someone, the company may face litigation from disgruntled employees or those who perceived the reasons for their firing were nefarious.

“They can be sued for damages and back pay, pain and suffering, punitive damages, and sometimes attorney fees, not to mention the litigation expenses both on the time and money basis,” Camacho Moran said.

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