Successfully parting ways with an employee

For most business owners, terminating an employee, regardless of the dentist’s relationship with the person, is never an easy thing to do. An incredibly successful doctor recently described the crushing anxiety of having to potentially terminate an employee as the worst part of his 20 years of business ownership.

However, if a staff member presents an issue to the culture of the business, failing to terminate the relationship only makes matters worse. Rather, facing the problem and taking immediate action is best for everyone. In each termination, however, a protocol should be followed to avoid personal and legal issues, and most importantly, to make sure that all parties can move on from the experience.

First and foremost, all problems with an employee should be documented in writing and placed in the person’s personnel file. Be sure to document that you have discussed performance problems with the employee, the steps outlined that must be taken to correct the problems, and to set a clear timeline for specific improvement, and then add this to the employee’s file. Finally, document every failed task and failure to meet the established performance goals so that there is a demonstrable track record for the termination. This not only protects you professionally but allows you to rest easy that every step possible was taken to improve the relationship and communicate clear expectations.

Next, maintain a proper venue for the event. Conduct the termination meeting in a private office, away from other staff and patients. To avoid accusations of impropriety, make sure to have a witness present. If possible, start the session by stating that the decision to terminate has already been made—this avoids prolonged discussion over the decision and focuses on the process. If given the opportunity, provide any constructive help that you can as to the type of work the person may be best suited for and his or her strong points. Give the employee his or her final paycheck, including pay for accrued vacation and sick leave, if that’s your policy, and secure updated addresses for W-2 forms and retirement plan distributions. Additionally, have appropriate health insurance forms ready for COBRA or state law continuation coverage, if required.

It is also essential that some items are recovered from the employee, and that a series of internal controls are executed. These include: (1) reclaiming the employee’s office keys, building pass, and/or access card; (2) changing the office lock and computer passwords; (3) revoking the employee’s computer access; (4) changing the security alarm code number; (5) revoking any check writing and ordering authority; (6) reclaiming all practice credit cards; (7) having the employee remove all personal belongings and return all practice-related equipment issued; and (8) notifying each vendor that the employee’s ordering authority has been revoked.

Don’t delay in executing the termination decision once it is made. Most doctors say their biggest regret when firing an employee is that they did not act on it sooner. The employee will also be better served to move on to another position that better suits the person’s skills and interest, so taking action is in everyone’s best interest. Regardless of how much a doctor prepares, termination will still be unpleasant, so accept it and understand that it’s part of owning a business. While terminating an employee is not fun, following these basic rules will minimize the stress involved while helping to improve your practice and protect it from future liability.  

Andrew Tucker, JD, Cfp, CPa, and John K. McGill, JD, MBA, CPA, provide tax and business planning for the dental profession and publish The McGill Advisory newsletter through John K. McGill & Company Inc., a member of the McGill & Hill Group LLC. It is your one-stop resource for tax and business planning, practice transitions, legal, retirement plan administration, CPA, and investment advisory services. Visit mcgillhillgroup.com or call (877) 306-9780.

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