How to Let an Employee Go: Tips From Leading Entrepreneurs

Updated on March 22, 2020
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Firing an employee is one of the difficult tasks a small business owner will eventually have to deal with.

Not only does a termination affect the employee’s career, self-esteem, and livelihood, losing an employee also affects other workers, their assignments, and the overall morale of your team.

In effect, letting an employee go is a sensitive issue, and a situation that entrepreneurs should handle with absolute care.

So, we asked 11 other entrepreneurs just like yourself, “How do you let an employee go in the best way possible?”

Here’s what they had to say.

1. Remember that your other employees are affected, too

“When you fire an employee, your actions speak loudly to everyone you didn’t fire. Pay severance, let people leave without a security escort, and don’t sidestep questions afterwards about what happened. Otherwise, everyone left on your team will assume you’ll treat them poorly, too.”

—Karl Sakas, agency consultant and author of Made to Lead

2. Leverage One-on-One Meetings to Avoid Firing in the First Place

“If one-on-one meetings are happening on a regular basis, leverage these conversations. Ideally, managers meet weekly to discuss performance, behavior, and the employee’s personal goals. It’s the leader’s job to help the employee understand the correlation between their performance at work and their personal achievement.

If this is happening, the decision to terminate will not come as a surprise and the manager can actually use the lack of results, the lack of the right behaviors, and the lack of personal achievement as the basis for the decision. This directs the conversation toward helping the employee reach their own goals and allows the manager to point back to real, tangible results..

Ultimately, the decision to terminate should be a decision based on business results and should remain in the best interest of the employee. Keeping someone employed who is unsuccessful is not in their best interest.”

—Jamie Newman, founder of

3. Be Kind and Compassionate

“Firing or letting go of someone is often very traumatic for that person. Do it with as much kindness and gentleness as possible—unless it was for inappropriate misconduct like sexual harassment, for example.

Let the person know that you do want to assist them, and give them examples and real actionable reasons for letting them go. Provide as much specifics as you can, especially if they fell short in their performance. And remember, they may end up working for a potential client or supplier some day, so you want them to think well of you and your company as they depart.”

—Stan Kimer, president of Total Engagement Consulting by Kimer

4. Be Specific to Avoid Any Wrongful Termination Claims

“As a small business owner, providing a clear reason when terminating an employee can often help reduce the likelihood of wrongful termination claims.

Not only is this good practice generally, but also by making your reasoning clear, you reduce the likelihood that a former employee will be left to speculate.”

—Maxime Rieman, CoverWallet

5. Don’t Drag Out the Conversation

“There is no great way to let an employee go. The best way is the quickest way. As soon as you have made this decision, talk to human resources, consult your payroll company, obtain legal advice, if available.

Call the person into a private office or conference room, explain why you have made your decision and say your goodbyes. This should only take a few minutes. Don’t go into lengthy explanations.

Be sure that nothing walks out the door that shouldn’t leave the premises. Have a company policy in place including a termination checklist, and follow this.”

—Dennis Zink, business alchemist and chapter chair of Manasota SCORE

6. Don’t Let It Be a Surprise

“Never let it be a surprise. When you offer employees feedback along the way, you are letting them know where they are failing and what they need to do to improve. It is very rare that an employee shows up one day and acts completely out of character and needs to be terminated.  

What is seen much more often is someone who is underperforming over time. It is critical to let these people know what they are doing wrong and that they need to turn the situation around in order to remain employed.  

Attaching a timeline and specific goals to the feedback will help to keep everyone on the same page. Ultimately, if the person cannot obtain the goals in the timeline needed, they will know that they are going to be terminated. Keeping surprise out of this situation will help all parties involved.”

Heather Monahan, business expert

7. Get All the Logistics Down That Day

“Pay everything you owe the employee on or before their last day. Wages, overtime, accrued vacation, bonuses, and any commissions earned should all be paid in the final check. In some states, such as California, if you fail to do this you will be liable for a full day’s pay for each day after termination (up to 30 calendar days) that you haven’t paid everything owed in full.

It should be common sense, but many employment lawsuits for wage and hour violations never would have taken place if the employer had simply treated the employee with respect and paid them what they were owed at termination.”

—Mark Chatow, Chatow Law

8. Make Them Leave on a Good Note

“It’s important to note that there is a difference between firing and letting go. Letting go, for instance, comes as a result of restructuring or economic hardship. If you’re going to let go of someone, be honest about the reason for letting them go. You may be perfectly happy to help them get another job and end things well at their current position.

People understand when things aren’t going well in a company. When changing directions or scaling down, there is no need to villainize people. You may want to hire that person back at some point or have them train their replacement. It’s much better to have them leave on a good note than a bad one.”

—Marc Prosser, co-founder of Fit Small Business

9. Be Private and Preserve the Dignity of the Employee

“First and foremost, if you’re going to let an employee go, do it in private; not only will it be easier for you to say what you need to say without eavesdroppers, even more importantly, it will be a much less humiliating experience for the person who is going to be told they’ve lost their job. If you have a conference room, or even just a small personal office, it is best to do it there—somewhere away from the rest of the workforce.

Do it at the start of the week so you can get the workplace in order as soon as possible after this employee’s departure. It’s best to do it at a time when it will least impact the business, such as during lunchtime or before the working day starts—this will also mean that the office will be relatively quieter at these times, too.

Furthermore, to preserve the dignity of the employee you are letting go, don’t ask them to clear their desk in front of their workmates. It is best to arrange a time after hours or a weekend for them to come and collect their personal items.”

—Steve Prichard, consultant at Dreambooth

10. Reiterate the Good

“In my opinion, the best way to let an employee go is to state how important they have been to the business and offer to give a good reference in the future. This often calms down the employee, and they understand that you are still willing to help in the future.”

—AJ Saleem, owner of Suprex Tutors Houston

11. Help With the Transition

“An employee’s workload never disappears once you fire them. Think about who is best suited to take over this work, create a plan to make that transition happen, and offer support throughout the process.

Firing one employee tends to make others nervous; any negative feelings they have will be magnified if you dump their former co-worker’s tasks on their desks without any direction. By helping them through the transition, you’re showing them that you still value the team and want to maintain strong connections with them.”

– Vladimir Gendelman, founder and CEO of Company Folders.

The Bottom Line

Letting an employee go for any reason is never easy. But these entrepreneurs have solid outlooks on how you can go about the unpleasant process as appropriately and kindly as possible.

Georgia McIntyre
Director of Content Marketing at Fundera

Georgia McIntyre

Georgia McIntyre is the director of content marketing at Fundera.

Georgia has written extensively about small business finance, specializing in business lending, credit cards, and accounting solutions. 

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