Company Name:
Effective Date:
Policy Owner:
Approved By:
Probation Period:
1.1 This policy defines a comprehensive and legally compliant framework for managing all forms of involuntary termination of employment within the Organization, including termination for cause, termination for poor performance, termination during the probationary period, and termination due to business restructuring or redundancy. The primary objective is to ensure that every termination decision is made fairly, consistently, and transparently, with due regard for the employee's rights, the Organization's legal obligations, and the principles of natural justice. This policy further aims to protect the Organization from wrongful termination claims by establishing clear procedural safeguards, documentation requirements, and approval workflows that must be followed before any termination is effected.
1.2 This policy applies to all employees of the Organization regardless of employment type, grade, department, or geographic location, including full-time, part-time, fixed-term contract, and probationary employees across all subsidiaries and affiliated entities. Termination of independent contractors, consultants, and agency workers is governed by the terms of their respective service agreements and is excluded from the scope of this policy. Where termination is subject to the provisions of a collective bargaining agreement or statutory redundancy scheme, those provisions shall take precedence to the extent of any conflict, and this policy shall apply supplementarily for all matters not specifically addressed by such agreements or schemes.
1.3 No employee shall be terminated without the prior written approval of the HR department and the relevant authority as defined in the Organization's termination approval matrix. For individual contributor roles, termination requires the joint approval of the employee's direct manager, the Department Head, and the HR Business Partner. For managerial and senior roles, additional approval from the Division Head and the Head of Human Resources is required. For director-level and above, or any termination that carries elevated legal risk, approval from the Chief Executive Officer and consultation with Legal Counsel is mandatory. The HR department shall serve as the gatekeeper for all termination actions and shall not process any termination that does not meet the procedural and documentation requirements set forth in this policy.
2.1 Termination for cause may be initiated when an employee engages in serious misconduct that fundamentally breaches the trust and confidence underlying the employment relationship. Grounds for termination for cause include, but are not limited to, fraud, embezzlement, or misappropriation of Organization funds or assets, theft or deliberate destruction of Organization property, harassment, discrimination, or bullying in violation of the Organization's workplace conduct policies, gross insubordination or wilful refusal to follow lawful and reasonable instructions, breach of confidentiality or unauthorised disclosure of proprietary information, falsification of records, credentials, or expense claims, being under the influence of alcohol or illegal substances during working hours, and any criminal conduct that materially impacts the employee's ability to perform their role or the Organization's reputation.
2.2 Termination for poor performance may be initiated when an employee consistently fails to meet the performance standards, objectives, or competency requirements of their role despite having been provided with adequate support, feedback, and a reasonable opportunity to improve. Before performance-based termination is considered, the employee must have received documented performance feedback identifying specific areas of deficiency, been placed on a formal Performance Improvement Plan with clear, measurable objectives, a defined support plan, and a remediation period of no less than 30 calendar days and typically 60 to 90 calendar days, received regular check-in meetings during the PIP period with documented progress assessments, and been given written notification that failure to meet PIP objectives may result in termination. Only after the PIP period has concluded and the employee has failed to demonstrate satisfactory improvement may the manager initiate a termination recommendation to the HR department.
2.3 Termination during the probationary period may be effected with a shorter notice period as specified in the employee's employment agreement, typically 7 to 15 calendar days, or payment in lieu of notice at the Organization's discretion. While a formal Performance Improvement Plan is not required during probation, the Organization shall ensure that the employee has received documented performance feedback, including at least one formal probationary review meeting, identifying the specific areas in which performance or conduct falls below expectations. The probationary review documentation must demonstrate that the employee was made aware of the performance gaps and given a reasonable opportunity to address them. The HR department shall review all probationary terminations before they are effected to ensure compliance with this policy and applicable employment laws.
2.4 Termination due to redundancy, business restructuring, reorganization, or position elimination shall be managed in accordance with the Organization's Layoff and Retrenchment Policy and all applicable statutory requirements regarding collective consultation obligations, fair selection criteria, notice periods, and severance entitlements. Where a role is made redundant, the Organization shall first explore reasonable alternatives, including redeployment to a comparable role within the Organization, before proceeding with termination. Selection criteria for redundancy shall be objective, non-discriminatory, and documented, and may include factors such as skills, qualifications, performance ratings, and length of service. The HR department shall ensure that all redundancy-related terminations are reviewed by Legal Counsel before being communicated to affected employees.
3.1 Before any termination is effected, the HR department shall conduct a comprehensive pre-termination review of the case file. This review shall verify that the grounds for termination are supported by documented evidence, that the employee has been afforded all procedural protections required by this policy and applicable law, including written warnings, opportunity to respond, and performance improvement support where applicable, that the proposed termination is consistent with how similar cases have been handled in the past to avoid claims of disparate treatment, that all required approvals have been obtained in accordance with the termination approval matrix, and that any jurisdiction-specific requirements such as mandatory notice periods, consultation obligations, or regulatory filings have been identified and addressed. The HR department shall prepare a termination case summary for the approving authority and Legal Counsel that documents the factual basis, procedural history, and risk assessment for the proposed termination.
3.2 In accordance with the principles of natural justice and procedural fairness, the employee shall be given a reasonable opportunity to respond to the allegations, performance concerns, or grounds cited for the proposed termination before a final decision is made. This shall take the form of a formal meeting at which the employee is informed of the specific grounds, presented with the evidence, and given the opportunity to provide their explanation or mitigating circumstances. The employee shall be entitled to be accompanied by a colleague or, where required by applicable law, a union representative. A written record of the meeting, including the employee's response, shall be prepared and retained in the case file. In cases of gross misconduct that pose an immediate risk to safety, security, or business operations, the Organization may place the employee on immediate paid suspension pending a full investigation, but the right to respond shall still be afforded before a final termination decision is reached.
3.3 The termination meeting shall be conducted by an HR representative in the presence of the employee's direct manager or a designated management representative. The meeting shall be scheduled at a time and in a private setting that preserves the employee's dignity and confidentiality. During the meeting, the HR representative shall communicate the termination decision, the effective date, the reason for termination in clear and factual terms, the final settlement terms including any notice pay, accrued leave encashment, and severance where applicable, information about the continuation or cessation of benefits, the exit process including asset return, access revocation, and clearance requirements, and any post-employment obligations. The employee shall be provided with a written termination letter that documents all of the above. The Organization shall allow the employee a reasonable period to collect personal belongings and shall ensure that the process is handled with professionalism, empathy, and respect.
4.1 Employees terminated without cause or due to redundancy shall be entitled to severance pay calculated in accordance with the terms of their employment agreement, the Organization's severance schedule, or the applicable statutory minimum, whichever provides the greatest benefit to the employee. The Organization's standard severance schedule provides a minimum of 2 weeks' base salary for each completed year of service, with a minimum of 4 weeks and a maximum of 26 weeks, unless a more generous arrangement is specified in the employee's agreement or required by law. Employees terminated for cause, including gross misconduct, shall not be entitled to severance pay beyond any statutory minimum that cannot be waived. The HR department shall calculate the severance amount, obtain approval from the Finance department, and present the offer to the employee in writing as part of the termination meeting.
4.2 The final settlement for a terminated employee shall include all outstanding salary up to and including the last working day, accrued and unused leave encashment calculated at the employee's daily rate, pro-rated bonuses or commissions where the employment agreement provides for payment upon termination, severance pay where applicable as described in this policy, reimbursement of any outstanding approved business expenses, and any other amounts contractually due under the employment agreement or Organization policy. The Finance department shall prepare the final settlement statement within 15 business days of the employee's last working day, and payment shall be made within 30 calendar days or within such shorter period as required by applicable law. Any amounts owed by the employee to the Organization, including unreturned assets, outstanding loans, or training cost recovery where contractually provided, may be offset against the final settlement in accordance with applicable law.
4.3 Where the Organization offers a separation or settlement agreement in connection with a termination, including agreements that contain a release of claims, the agreement shall be presented to the employee in writing and the employee shall be given a minimum of 21 calendar days to review the agreement before signing, or 45 calendar days where the separation is part of a group layoff or reduction in force as required under the Older Workers Benefit Protection Act or equivalent legislation. The employee shall be advised in writing of their right to consult with an attorney or other advisor before signing. Following execution of the agreement, the employee shall have a revocation period of 7 calendar days during which they may rescind their acceptance. The separation agreement shall not become effective until the revocation period has expired without the employee exercising their right to revoke. The HR department shall coordinate with Legal Counsel to ensure that all separation agreements comply with applicable federal, state, and local requirements.
5.1 An employee who believes that their termination was unjust, disproportionate, or procedurally deficient may file a formal written appeal with the Head of Human Resources within 10 business days of receiving the termination notice. The appeal must specify the grounds on which the employee challenges the decision and any supporting evidence or mitigating circumstances not previously considered. The Head of Human Resources shall convene an appeal review panel comprising an HR representative not previously involved in the case, a senior manager from a department unrelated to the employee, and Legal Counsel where the case involves legal complexity. The appeal panel shall review the case file, hear the employee's submission, and issue a written decision within 15 business days of receiving the appeal. The appeal panel's decision shall be final and binding within the Organization, without prejudice to the employee's right to pursue external remedies under applicable law.
5.2 Any manager, supervisor, or HR representative who initiates, approves, or executes a termination in violation of the procedures prescribed in this policy shall be subject to disciplinary action proportionate to the nature and severity of the violation. Violations include terminating an employee without the required approvals, failing to provide the employee with an opportunity to respond, failing to document the grounds and procedural steps, and deviating from the Organization's past practice in a manner that creates a risk of discrimination or disparate treatment claims. Disciplinary consequences may include formal counselling and documented warning, mandatory retraining on termination procedures, suspension from management authority for a defined period, and further sanctions up to and including termination of the offending manager's own employment. The HR department shall investigate all reported procedural violations and maintain a record of findings and corrective actions taken.
5.3 This policy shall be reviewed comprehensively at least once every 12 months by the policy owner, in consultation with Legal Counsel and senior HR leadership, to ensure that it remains current, legally compliant, and aligned with the Organization's evolving business practices and workforce strategy. An interim review shall be triggered by any material change in applicable employment legislation, a significant organizational restructuring, a court ruling or regulatory guidance that affects termination practices, or the identification of systemic compliance gaps through internal audit or employee complaints. All amendments shall be approved by the Head of Human Resources and the Chief Executive Officer, communicated to all managers and employees in writing at least 14 calendar days before the effective date, and recorded in the policy version history. The HR department shall maintain training records demonstrating that all managers with termination authority have been briefed on the current version of this policy.
An employee termination policy is a formal document that establishes the Organization's procedures and standards for ending the employment relationship, whether initiated by the employer (involuntary) or the employee (voluntary). It covers the grounds for termination, progressive discipline requirements, documentation standards, final pay procedures, and the rights and obligations of both parties.
A well-drafted termination policy protects the Organization from wrongful termination claims while ensuring that employees are treated fairly and with dignity throughout the separation process.
Without a documented termination policy, organizations expose themselves to significant legal risk. Wrongful termination lawsuits cost US employers an average of $200,000 to settle, according to the Employment Law Alliance. A clear, consistently applied termination policy provides the documentation trail needed to defend employment decisions.
Beyond legal protection, a termination policy ensures that managers follow a fair and consistent process, reducing the perception of arbitrary or discriminatory treatment that can damage morale and employer reputation.
An effective termination policy covers grounds for termination (performance, misconduct, redundancy), progressive discipline procedures, documentation requirements, approval chains, termination meeting protocols, final pay and benefits, and post-termination obligations.
The policy should specify which offences warrant immediate termination without progressive discipline and which require a documented escalation process. It should also address the Organization's at-will employment status where applicable.
Customize this template with your Organization's specific discipline procedures, approval requirements, and final pay timelines. Have legal counsel review the policy for compliance with applicable employment law, particularly wrongful termination, discrimination, and final pay requirements.
Train all managers on the termination process, emphasising documentation requirements and the importance of consistent application. Distribute the policy through the employee handbook.