During this time of employee contraction, (U.S. Gov’t report that job losses have SLOWED not stopped.) employers tend to focus on the unpleasant task of actually terminating employees when the employee does something wrong. However, often the needs of the business demand that positions be cut and employees be terminated. When a reduction in force is required, employees file for and get unemployment costs. The employer is required to pay into the unemployment system, and the amount of the annual assessment is based on the amount of unemployment paid out to the employer’s terminated personnel.
These costs are totally controllable and when an employee is terminated for cause, unemployment funds are not paid to the former employee and the employer is not charged.
When I directed the HR department for a heath care company, I advised managers to use a procedure that not only made the termination process easier and less emotional, (for both parties) but also set up the employer to be in a win/win situation.
Let’s face it, after the time and expense of training an individual to be productive and fit into the business and pull their own weight, if you could maintain the individual the replacement costs (e.g. recruiting and training) would be saved and not paying unemployment would positively affect the business financial health.
How to do it? Use a process of discipline that includes a short suspension to give the employee an opportunity to turn around and become a productive member of the team. In the health care company, when an employee’s performance suffered to the extent that termination was being considered, I would ask the manager what level of performance the employee would need to meet to be retained. Past performance would be reviewed and a level of performance would be spelled out in a memo of expectations. The employee would meet with their manager and be informed that their job was in jeopardy, and that the employee was being suspended for 1 to 2 days to consider their position in the company and the level of performance that was expected of that person while in that position. The employee was asked to come back to a meeting with a signed document that stated if they would meet the performance and timeline expected by the employer. Failure to bring the document or show for the meeting was considered a voluntary termination.
Voluntary terminations are not eligible for unemployment benefits. If the employee did come back and did not perform to the company’s expectation, then “good cause” for the termination was established. If the employee did not return for the meeting or failed to bring the required document, that was grounds for termination based on insubordination.
What we found after instituting this policy and training managers on how to implement it, 66% of the employees returned to work as productive members of the team. Those employees, who failed to come back or never met the requirements for the job and were terminated, did not obtain unemployment benefits.
Take control of an easily controlled cost. Don’t keep paying out large unemployment premiums. G & J Consultants show you how to reduce your unemployment premiums and employee replacement costs while retaining those employees you want to keep.
Glenn Brown is the CEO of G & J Consultants, LLC. In addition to having directed the HR Department of a health care services company, Glenn is a licensed attorney with 15 years experience assisting businesses of all sizes and industries in complying with employment and labor legal issues. G & J Consultants specializes in providing small and medium sized businesses with traditional HR services as well as compliance with employment laws and regulations.
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