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How to terminate an employee legally

HR & Compliance

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Updated on:
March 15, 2024
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Updated on :

March 15, 2024
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How to terminate an employee legally


Terminating an employee has to be one of the most awkward, complicated, and unpleasant activities for any employer, regardless of the reason. 

However, beyond the unpleasantness of the situation, Terminating an employee by following best practices and leaving no room for lawsuits is essential for every organization. 

In this age, employers must consider the possibility of facing legal action after an employee’s dismissal. According to Leftronic, in the last 20 years, termination lawsuits have increased by 260%. This increase indicates an organization is three times more likely to get sued than an office building catching fire.

Therefore, it is crucial for every organization to know how to fire an employee legally. This article highlights the steps and processes to avoid termination lawsuits.

How to fire an employee legally

Know when to apply your employer’s rights rightly

In many regions, employers hire on an “at-will” basis. This basis means the employer has the right to terminate the employee’s employment at any time, with or without any cause. While this is a legal right, some exceptions blur the lines of an employer’s at-will rights.

These exceptions are


In most federal laws, it is illegal to terminate an employee based on race, age, sex, religion, or disability. Even though at-will termination means the employee can terminate an employee on whatsoever grounds, it does not make provisions on discriminatory grounds.

The “Just cause” clause

Once the “just cause” clause for termination is included in the employment contract, it establishes the termination grounds regarding that particular employee. If an employee with a “just cause” clause in the employment contract is fired based on an employer’s “at-will” termination rights, the employer is at risk of facing a lawsuit for negating their contract terms.

Public policy

An employer cannot legally fire an employee for reasons that goes against public policy. If an employee’s actions put the organization in a bad light but are within the law's limits, the employer has no right to fire the employee.

Document employee violations

If an employee violates the organization’s policies, it is best practice to have it documented for posterity with the employee’s knowledge. 

Also, communicate concerns, expectations, and failings. It is in the best interest of both parties to be made aware of what can lead to termination. With this method, the best-case scenario involves the employee making adjustments and improving their service offerings.

Terminate employees according to the organization’s documented policies

Usually, all organizations have formal employee handbooks that document disciplinary actions and potential termination reasons. It is best practice for all employees to be in possession of a copy of this document during the onboarding process. With this guide, employees are required to abide by the stated guidelines, and any violation leads to an agreed ground for termination. 

Also, before proceeding with an employee’s termination, ensure that the grounds are in accordance with the reasons or policies stated in the company’s handbook.

Fulfill all legal requirements

Under most jurisdictions, termination of employment requires the employer to make available certain provisions such as benefits, severance pay, and other statutory provisions. Failure to comply with the requirements governing termination in the employee’s region can result in unpleasant lawsuits.

Be brief during employee termination and show respect

When everything's set, it is best to sit down with the employee and explain why they are being laid off. It's important that the employee receives factual information regarding their termination. By doing this, the employer ensures that the employee is not misled. Also, ensure the employee gets the news in person. This act communicates respect and reduces the likelihood of an adverse reaction.

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Terminating an employee is arguably one of the most unpleasant aspects of managing a team. But, it can be challenging to deal with a disgruntled employee or face employment lawsuits due to not carrying out the termination process in compliance with the employment laws or stipulated agreements. 

However, partnering with an Employer of Record (EOR) platform like Skuad ensures that organizations carry out the termination process or deal with employees in compliance with employment laws.

Put compliance on auto-pilot with Skuad

Skuad is a global employment and payroll platform that allows employers to hire contractors and full-time employees in over 160 countries without setting up subsidiaries. Skuad also helps organizations onboard talent, manage payroll, and ensures compliance with country-specific employment laws. 

With Skuad as your EOR partner, you can rest assured of staying above the complexities and unpleasant situations of termination and lawsuits. 

To know more about Skuad, book a demo today.

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Table of Content

About the author

Catalina Wang is a Human Resource Consultant. She manages recruitment, onboarding, and contract administration staffing for many organizations and remote teams. She’s passionate about efficient HR management and the impact of tech on hiring practices.

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