You're fired! Letting an employee go isn't easy for any manager. But if you must, take steps to protect yourself and your business.

Although it's fun to hear The Donald say the phrase to eliminate his underlings, those two words can be nearly as difficult for a boss to utter as they are for the employee to hear: you're fired.

Beyond the emotional issues, disciplinary termination can be litigious because resentful employees have nothing to lose; they may as well drag your company through a legal quagmire. Don't take chances--be prepared. By taking careful preventative steps, you can prevent a legal nightmare when terminating employment.

Of course, if it were simply a matter of hiring only great people, no one would ever have to terminate employees for conduct or performance. But a few inadequate employees slip by even pro recruiters.

"The reality is that in spite of (careful screening), the employee could have been very successful in their last position, but because of the work environment or personalities, they may not work out," said Anne Bulmer, administrative manager at Alaska Executive Search in Anchorage.

Outline Expectations

To prevent having to say "you're fired," you need to develop or examine your company's policy guidelines. Each position must have a job description so you know and employees know what is required of them. That is the benchmark against which you can measure their performance.

Don't compare employees against previous employees in the same position because changes in the market, industry and your specific company can impact the job performance. The current employee may simply have a style or flair for the work that is just as effective but different from a previous employee. If these kinds of misunderstandings form your basis for termination, the employee has adequate grounds for legal retaliation.

Formulate conduct policies. Of course, illegal activities are understood to be unacceptable; however, you need to record in your company policy handbook specific on-the-job activities/ attitudes that are forbidden because they are unsafe or unacceptable for your industry. For example, it is reasonable for a hospital to forbid employees from chewing gum on the job or for an auto sales company to forbid sales staff from displaying body jewelry. Explain the consequences of breaking the rules and the procedure for administering the consequences.

Formulating policies may sound like a lot of unnecessary red tape, but it builds a legal foundation for protecting your company. Policies eliminate the excuse of "I didn't know" because all employees should be required to sign a release (later to be placed in their personnel files) that they read, understand and agree to abide by the company policies.

The implied covenant of good faith and fair dealing means that you must follow your company policies and treat all employees alike. If one employee is reprimanded for showing up late and another isn't, you give the appearance of favoritism. This brews trouble when you terminate habitually tardy employees.

Hiring Options

You can avoid much of the headaches by hiring through temporary agencies so it's their responsibility to terminate bad apples; or, you can hire on a 90-day probationary policy. At the end of the three months, you can decide to take on the employee as a regular employee. (Note: never say "permanent" employee, Bulmer reminded, because there is no such thing as a permanent employee. Even those on contract and not considered "at-will" employees can be fired.) For most new hires, 90 days is plenty of time to ensure or rule out a lasting relationship.

If minor incidences of poor conduct or lower-than-average performance or a combination of both continually hamper an employee's service at your company, you need to take steps to salvage the working relationship. Even if you are pretty sure you will fire that person, taking these steps will prove that you did your best to keep the employee if a lawsuit crops up.

Documentation Vital

Documentation is everything in human resources. Document every complaint, every warning, every meeting and every evaluation. Every time, with every employee.

Paul Davis, an attorney with Preston, Gates and Ellis LLP in Anchorage, thinks that written warnings and other documentation are "critical," he said. "The type of plaintiffs that are most successful are the ones relatively obsessive-compulsive in documentation."

Plaintiffs with huge boxes of accumulated documentation bring "the biggest smiles to my face," he added.

Documentation, not hearsay, will turn a litigious situation in your favor. Make sure that your policy handbook indicates what you document and for how long. Keep complaints and disciplinary write-ups for the prescribed time that you will consider them as steps toward termination, such as three months.

Although most companies uphold an "at-will employment" policy, meaning either party can end the employment relationship at any time for any reason, they also follow a rule of "three strikes and you're out." If an employee has three written warnings within three months, his employment is terminated.

Use this rule with caution, however. A clerical error, for example, may show the employee has been absent more than what he really was. Sometimes, employees in training just need more guidance. Simple mistakes, though costly, may be traced back to training issues. Take into consideration the employee's attitude and aptitude. Perhaps a change in job duties or reassignment to a different location can help. A documented verbal warning or a written warning may also foster improvement.

"Sit down with the employee and let them know there is a problem," said Bill Mede, an Anchorage attorney. "Work with them and help them come up with a solution. Once they are a joint participant in an interactive process, you're more likely to have them get turned around."

Wilcox recommends a timeline that gives the employee a deadline for amending behavior.

If this doesn't happen, you will need to terminate. However, since you've been documenting each step along the way, you can prove to the employee (and, if need be, to the court) that you have done all you can to save the work relationship.

The Day Arrives

Davis urges employers to be up front during a termination meeting.

"Oftentimes, (employers) are embarrassed and not comfortable doing the firing," he said. "They come up for some other reason for firing like 'We'll have to let you go because of economic problems,' or 'the job was phased out.'

"Later on, the employee will find out the job was filled by someone else. Now the employer is caught in a lie and is defending himself or herself on that basis."

Instead, Davis encourages employers to have "a candid, honest description as to the reason for the termination."

Be prepared with the employee's final paycheck, any severance pay or owed vacation pay, COBRA information and all other documents related to the termination. Have a list of all keys, equipment, passwords and codes you need to collect from the employee.

Take care that the termination is performed professionally and with as little embarrassment to the employee as possible.

"The employer must be sensitive that the employee is embarrassed," said Paul Wilcox, an attorney with Hughes Thorness Powell Huddleston & Bauman LLC in Anchorage. "He doesn't want to lead the way toward a legal action such as (a claim involving) emotional stress and defamation if it's not true."

Make it quick and quiet-drawing the employee into a debate or allowing other employees to overhear can make an unstable situation explosive.

Plan the meeting for late in the day at the end of the workweek or when fewer employees are in the building. Discourage any discussions by other employees about the termination.

Make it a matter of policy that all termination meetings must involve two members of management. By keeping the policy the same for all cases such as this, you run a smaller risk of attracting a lawsuit.

Other tactics include offering the employee the opportunity to quit. Especially for upper-level employees, quitting will be a relief compared to blemishing their resume with an unwanted termination. If you take this route, bring a prepared resignation letter for the employee to sign and assure him that subsequent reference requests will be answered with dates of employment only.

You can also offer a release of claims in exchange for a limited reference; however, this can cause the employee to refuse to sign, thinking that he does have a viable legal claim.

"It's really a judgment call," Mede said. "We usually don't use a release."

Of course, in cases of gross misconduct, you will have leverage to terminate employment more quickly; however, you should perform a thorough, fair and documented investigation if there is any question as to what happened.

"If this is a situation where you're unsure, if you have any questions, go and talk to your HR person or counsel," Davis said. "It is preventative law. Most attorneys in Anchorage who have a good amount of experience in employment law are charging $250 an hour. It could save your company $250,000. It seems like a good investment."

Terminating employment is an unpleasant situation; however, with consistency and careful planning, you can minimize your company's risk of legal action.