Being an owner in the company, you might come across many reasons for wanting to separate with a particular employee. It can be based on the operational needs of the company or due to the specific concerns of some employees. Whatever the reasons may be, there is a decent way by which you can off-board your employees easily.
Keep reading to know the tips for exiting employees in an early-stage company!
There will be a time where you will have to offboard your employees. And regardless of the reason for the termination, it is vital for you to carefully access all the key considerations and risks, both when making the decision to terminate employment and when implementing the decision. The following questions will help you with the areas you might consider.
Before we can talk about the specific points, remember that it is important to strategically script discussions and consider the logistics for a smooth and lawful transition when taking any termination action.
How to Assess Your Legal Risk?
While you access the potential risk and legal obligations in a specific termination, you need to analyze a large number of factors, which include:
- The reason for the termination along with the documentation, support and prior communication of the reason;
- Any applicable protected classifications for the purpose of possible harassment, discrimination, or retaliation claims. These include not just the attributes like disability, gender, race, age, religion, and sexual orientation but many other categories like whistleblower protections and protections for exercising legal rights;
- Upcoming vesting of any equity, bonus, or other compensation or benefits;
- The immigration status;
- Any contractual commitments (oral or written), policies or plans that govern the potential post-employment benefits or individual’s employment; and
- Past, present and expected future terminations, which include previous treatment of employees in related circumstances (if any) and the potential for setting an expectation, or “precedent”, for treatment of employees in the future.
If the company wants the exiting employees to sign a release of claims, it has to offer something extra beyond the contractual and legal requirements to obtain an effective release. There are a lot of options for putting together a severance package that ranges from transition periods of benefit, compensation, continued service and equity packages, to provisions for messaging and timing of the employee’s exit. Which from these will benefit the company depends on the specific situation of each termination.
Factors to Consider
Finally, along with the above risk assessment, it is important to consider some of the logistical factors that can also impact a few legal concerns, including:
- Protection of company IP, which includes the capability for this individual to harm IP on their way out;
- Any other relationships or agreements (e.g., visa status and requirements upon termination, transfer of benefit plans, elected positions, promissory notes, etc.) that should be addressed;
- Whether the company should obtain passwords or other information prior to the employee’s exit, mostly if the employee is the designated contact, signatory, or account owner for any company accounts;
- Logistics and timing of final pay and exit paperwork (in amounts and within the timeframe required by state and federal law);
- Talking points for the exit discussion with the employee;
- Strategies for the timing, location, and participants in the exit discussion;
- Logistics of the employee’s return of company property, and exit from the office; and
- Talking points for discussions with the remaining employees in the company along with taking into account workplace morale and agreed-upon messaging.
Being an early-stage company, it is important to consult the employment council when making and implementing an employee termination decision. Keep in mind that the consideration of the above factors and the gathering of any applicable agreements, policies, and plans before the conversation with the council would help make the call highly efficient.
These tips would help you make a well-informed decision for exiting employees in your early-stage company. But in case you want to know all the steps that you need to take and all the points you need to keep in mind for the exit strategy, check out the checklist for exiting employees in an early-stage company here!