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Involuntary Termination

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Involuntary termination meaning

Involuntary termination, often known as being fired or laid off, refers to a situation where an employee’s employment is finalized by the organization and not by the employee’s own choice. It might be due to poor performance, reorganizations/layoffs, or other business or economic factors. Unlike voluntary termination, where the employee chooses to leave (e.g., resignation or retirement), involuntary termination is initiated by the employer and not by the employee.

Reasons for involuntary termination

There are several reasons why an organization may choose to terminate an employee. Some of those reasons may relate to the behavior or performance of the employee, while others may be based on the specific needs of the employer. Here are a few examples: 

  1. Financial cuts: Companies may terminate employees due to economic downturns, financial struggles, or budget costs. These terminations are typically not a reflection of an individual’s performance.
  2. Reorganizations/downsizing: When an employer decides to restructure, downsize, or cut costs, it can result in termination of employees whose positions are no longer needed. This is also not a reflection of the employee’s performance and employers usually provide severance packages in these situations.
  3. Poor performance: Employees are expected to meet specific standards of performance in order to achieve both personal and company goals. When an employee is consistently not meeting expectations in their role, despite coaching and attempts to improve, it can result in termination.
  4. Attendance issues: Consistent tardiness and absenteeism, or failure to follow proper call-in procedures around absences can be grounds for termination. This behavior disrupts workplace operations and places a burden on other team members.
  5. Misconduct: This involves employees engaging in behavior that is against company policies or professional standards. Misconduct can range from minor issues like consistent tardiness to more serious issues like theft, harassment or bullying. Depending on the gravity, it can lead to immediate termination.
5 Reasons for involuntary termination: Financial cuts, poor performance, attendance issues, etc.

Voluntary vs. involuntary termination

AspectVoluntary terminationInvoluntary termination
DefinitionWhen an employee decides to leave their job on their own accordWhen an employer decides to terminate an employee’s contract
Common reasonsCareer change, personal reasons, relocation, retirementPoor performance, misconduct, redundancy, business closure
Severance payUsually not applicable unless specified in the employment contractOften provided, especially in cases of redundancy or layoffs
Unemployment benefitsGenerally not eligible, except under specific circumstances (e.g., constructive dismissal)Often eligible, unless termination is due to misconduct
Documentation requiredResignation letter from the employeeDocumentation supporting the reason for termination (performance reviews, disciplinary records, etc.)

Involuntary termination vs. layoff

A layoff typically occurs when a business needs to reduce its workforce, often due to factors like financial constraints, restructuring or a downturn in the economy. They affect multiple employees and are generally understood as a reflection of the company’s situation rather than the performance of the employees laid off. 

On the other hand, involuntary termination is often linked to the employee’s performance or behavior, like misconduct, violation of company policies, or poor job performance. This type of termination is specific to the individual and often follows a review process by the employer.

Company example of layoffs

Amazon initiated a series of involuntary terminations within its devices, retail, and human resources divisions. Approximately 10,000 employees were affected by these cuts. Additionally, it was announced that the company intended to reduce its workforce by over 18,000 employees in total. To assist those impacted, Amazon offered severance packages that included separation payments, transitional health insurance benefits, and external job placement support.

How should HR handle an involuntary termination?

Handling an involuntary termination is a sensitive and critical task for any HR department. It’s important to approach this process with a high degree of professionalism, empathy, and adherence to legal and ethical standards. Here are some key steps and considerations for HR professionals in managing involuntary terminations:

  • Review the company’s termination policy: The first step is to thoroughly review the company’s termination policy. This policy should outline the grounds for involuntary termination, the process to be followed, and any severance or benefits to be provided. This step often involves revisiting the employee’s contract and any relevant documentation that outlines the terms of employment and termination conditions.
  • Document performance and conduct issues: Before proceeding with an involuntary termination, it’s important to have a well-documented history of the employee’s performance and conduct issues. This documentation should include dates, specific incidents, any previous warnings given to the employee, as well as their responses to these warnings. 
  • Prepare for the termination meeting: The termination meeting is a critical step and should be handled with sensitivity and professionalism. It’s important to plan the logistics of the meeting, including the time, location, and who will be present. Typically, a representative from HR and the employee’s direct supervisor will attend.
  • Communicate with the rest of the staff: After the termination, it’s important to communicate with the remaining staff, while respecting the privacy of the terminated employee. The goal is to address any potential rumors and to reassure employees about their own job security, if necessary. It’s also important to strike a balance between transparency and discretion.
  • Seek legal advice when necessary: Involuntary terminations can sometimes lead to legal complications, especially if the terminated employee believes it unfair or unlawful. In such cases, it’s prudent for HR to seek legal advice to ensure that all actions taken are legally defensible. 

HR tip

Ideally, organizations want to avoid involuntary termination whenever possible. By providing employees with the right tools, including introducing regular performance meetings and providing needed feedback on a regular basis, you can often decrease the odds of involuntary termination and keep team members onboard.

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