“Sugar Coating” Reason for Termination Will Leave Sour Aftertaste, Lawyer Says

Managers are often tempted to “sugar coat” the reasons an employee is terminated for poor performance, particularly when hard economic times support the contention. But, according to attorney Allen M. Kato, counsel at the San Francisco office of law firm Fenwick & West, LLP, this could turn very sour if the employee is inclined to sue.

“Juries get to decide. If, at the time of discharge, you told the employee, ‘You are being laid off. It has nothing to do with your performance,’ and then turn around at trial and say it was ‘poor performance,’ don’t be surprised if the jury doesn’t believe you,” Kato said. His remarks came during the ERI 2009 California Employment Law Update conference in San Francisco, held Nov. 4-6, 2009.

The employee’s attorney will try embarrass you by “proving” that you and the company “lied” by showing that the reason given in court was different than that originally given. This is particularly damaging if the employee was replaced. “Don’t expect juries to be sympathetic,” he said.

Making Life Harder

“If I’m litigating on your behalf, I can fight this ‘proof,’” Kato joked, “but you don’t have to make life harder for me.” Kato’s remedy: Above all else, train managers. Don’t allow them to say anything that isn’t true. Explanations should be honest and concise. They don’t have to be detailed. For example, they can say, “‘Performance was a factor.’ They don’t have to say anything else. That simple statement is all it takes.”

Big Impact

Kato said that this is an area where HR can have a big impact. A mistake can create serious legal liability, but a little training can go a long way.

Rules of Thumb for Terminations

He also offered some brief rules of thumb for terminations:

The “Dos”

• Allow around 10 minutes for the meeting (but don’t seem rushed)
• Briefly explain the reason for the termination
• Explain final pay and any severance benefits that are being offered
• Explain continuing obligation to protect trade secrets and other exit issues
• Offer to answer any questions

The “Don’ts”

• Don’t argue with the employee
• Don’t bad mouth the company
• Don’t suggest the decision was unfair
• Don’t inaccurately give hope for re-hire
• If performance played a role in the employee’s selection (for layoff), don’t suggest otherwise.