My major draw in supporting small businesses is the fact that they do not have the resources, the time, or the knowledge to deal with HR related issues. That said - a small business has huge risks associated with their employees and most of the time they don't even know it! Their employees are their greatest asset -- but also their greatest liability.
Small businesses rarely have employment agreements (other than those promises scratched across a napkin) but the risk of choosing not to have them could be costly for an employer. An employment agreement helps a small business to set out expectations as appropriate (reporting structure, salary, start date, probationary period), it contains items that stops an employee from taking the knowledge learned to their competitors, outlines how the termination process will work and typically includes a job description that outlines minimum standards of work. Once these are agreed to (signatures included) both the employer and the employee have a duty to act accordingly. (I'm a huge proponent of employment agreements, and I can help you create yours without having to consult a lawyer!)
So now you've got this employee and he or she is not working out. Let's say, you do in fact have an employment agreement where you have outlined the minimum termination package that is in line with the statute. Unfortunately, even though you and the employee have agreed to this, there is no rule of thumb that this is an appropriate payout for a termination (but it does help!) There are a few things you should keep in mind when terminating an employee and determining what you will pay them:
1.) Cause is almost impossible to prove. So trying to pay anyone without notice is asking for trouble. Unless those video cameras have caught the person red-handed stealing from your till and you can see their face beyond a shadow of a doubt, it's doubtful you have a case for cause.
2.) So considering there is going to be a payout, typically the best thing to do is never state why the employee is no longer wanted in the company. The biggest danger is saying, "You're just not doing what I want. It's not working for me." I Instead, when you are going to terminate someone, state, "Your services are no longer required." A lack of performance, in the eyes of the law, is not a justifiable reason for termination without months and even years of demonstrating how this lack of performance hurts the business. An employer must show a track record of support for the employee.
3.) So how much notice does an employer have to provide an employee when they no longer have a need for them? Unfortunately, there is no rule of thumb. It just has to be "fair". But if you're not fair - a judge could have a hay day in court with you, and a judgement against a small business could not only be costly, it could mean the end of the small business. The items that determine a payout are as follows: the character of employment (what position was held), length of service, age of the employee and the type of work available in a similar position. The higher position, the longer the service, the older the employee and a dreary job market makes a pay-out that much more.
If you go online right now, you can type in Wrongful Dismissal cases. I wouldn't want my name on that list, nor would I want to have to pay a lawyer, plus a settlement. But if you need help when terminating an employee, Elevated HR Solutions can help. Just contact me at michelleb@elevatedhr.com
The process can be brutal - but with careful planning and help, a small business can stay in control of both their business and their costs!
http://www.elevatedhr.com/
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