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Terminating an employee is never easy

you are firedIn my many years in the real estate and appraisal business, from time to time it was necessary to discharge an employee. I found it difficult the first time and equally hard the last.

If you must discharge a sales agent or a clerical employee, particularly one who has been with you for some time, it will be difficult. When this person accepted a position within your firm, both parties were optimistic. However, sometimes things don’t work out as intended and there must be a parting of the ways. Some may go amicably; some will be fuming, while others threaten legal action for wrongful dismissal. It always engenders intense emotions for all parties – you, the departing person and those who remain.

If the situation is not handled with discretion, it could generate a costly lawsuit. This could also apply to “constructive dismissal”, which is where by creating an oppressive environment, the employee is forced to leave. Oversights made before, during the exit interview and after the discharge can significantly affect both broker and employee.

Terminating for just cause – “For just cause” means that the employer has a valid reason to fire this person. The reasons are numerous and could include such infractions as poor performance, overstatement of qualifications, incompetency, violation of professional ethics, inappropriate behaviour, sexual misconduct, using drugs or drinking on the job or being belligerent to other staff members and clients. Too often it is easy to assume that if the difficulties are ignored for long enough, they will just disappear. This is wishful thinking. In most cases the problems become exacerbated with time.

Wrongful dismissal – Today’s labour laws appear to be structured in favour of the employee. One only has to read the multitude of advertisements by law firms to see that few are for the benefit of the employers.  However, this does not limit your right to discharge an employee for a good reason.  Just ensure that the discharge is not prejudicial or could be classified as “wrongful dismissal.” This would include discrimination on the basis of race, sex, religion, age, nationality or sexual orientation. You cannot fire an agent or employee who filed a discrimination claim, refused to commit an illegal act or has a statutory right.

However, the law is not unfair. It provides the employer the opportunity to prove that the dismissal was not wrongful or prejudicial. Still, be careful! Methodically document the reasons and the steps you have taken in bringing about this action.  Once you have decided to do it, it’s a good idea to consult with your lawyer and lay out the procedure. You may have to defend your actions before a judge. You might not be guilty of wrongful dismissal but the cost of proving your innocence could be exorbitant. If you must appear in court, never take with you any notes that could be construed as having even the slightest hint of prejudice. Better yet, don’t take any papers of any kind.

Some years ago, when defending a major project foreclosure, opposing counsel snatched my sheath of notes and used some of that information against me. Destroy any such data that may be in your files.

Before terminating – Discharging an employee should never be a “shoot from the hip” reaction to a specific situation. It should be a well-thought-out yet timely process. Don’t delay it unnecessarily.  Some years ago I spent many hours debating with myself whether to fire one of my best sales agents. He was a good producer but very disruptive and would steal newer agents’ clients under the guise of helping them out. When eventually fired, he stomped out the door with a, “You haven’t heard the last of this!” Discharging him brought peace and harmony to the office. It should have been done much earlier.

In another case an employee appraiser struggled with appraisals and I struggled with him for about six months. He was good at book learning but poor in practice. There was no way to correct his poor performance. He had the desire to be an appraiser but lacked the ability. By discharging him I did both of us a favour. He could now seek employment where his talents could be used. When in similar situations, you must satisfy yourself that you have taken all steps to ensure that terminating this individual is the correct action and doing so is best for all.

The steps:

* Unless you have prior knowledge, begin with a detailed investigation into cause and probable action.

* Ensure that the problem or allegations are real and have been or can be substantiated.

* Have a sit-down with the employee or sales agent and in an open, non-prejudicial manner discuss the problem or allegations.

* Give the employee every opportunity to respond.

* Seek an alternative solution to dismissal.

* Most importantly, when you are certain that the problem(s) cannot be resolved, do not sweep it under the rug. Act with discretion and candour.

Doing the deed – Having concluded that there is no alternative, take a day or three to plan the exit interview so that it creates the minimum of anguish for both you and the employee.  Be certain to provide a detailed explanation of why you are taking this action. Be clear about the reasons. Document those reasons.

Whether to provide the employee with a termination letter setting out your reasons is your call. Avoid personal, degrading or vague statements and don’t say anything that might suggest the situation is reversible. Consider the possibility of an irrational, negative combative reaction and perhaps a tear-stained appeal. Having reached this point, do it now, not tomorrow or next week. Now! Never allow an employee a few days or weeks to get his/her things in order. This only permits this person to do nothing to further your brokerage but to perhaps bad-mouth you.  Resolve the issues about confidentiality, listings, ongoing files, client retention, return of your property and the employee becoming a competitor.

After the termination – Some remaining staff members may think you have acted too harshly and prematurely. Others will wonder what took you so long. Saying, “It’s not your concern” or something of this sort, may not cut it. You must gauge yourself as to how much explanation is required and you are prepared to give. There is no definite rule as to how to deal with these situations. Play it by ear and hope for the best.

Lloyd ManningThe bottom line – Discharging a sales agent or other employee will always be stressful for both you and the employee. To avoid having the situation get out of hand be certain to go about it carefully, methodically and with forethought. Know and understand the protection given to employees by the laws of your province. You could be sued for a tort action, wrongful dismissal and prejudice including punitive damage for pain, suffering and anything else that comes to some high-priced lawyer’s mind. It may be wise to consult your own lawyer and let this person draft the dismissal letter should you choose to use one. You can legally discharge an unsatisfactory employee but doing it hurriedly can too easily backfire.

Lloyd Manning, AACI, FRI, CCRA, PApp is a semi-retired commercial real estate and business appraiser and broker who now spends his time writing for professional journals and trade magazines. He resides in Lloydminster, Alta. Email