Documenting Performance Issues & Handling Terminations the Right Way
Employment decisions are some of the most challenging moments for any business owner—especially for small businesses and startups without a formal HR department. Questions around documentation, discipline, and termination come up often, and the stakes can feel high.
We regularly hear versions of the same concerns: How much documentation is enough? Do we always need a performance improvement plan? When can we terminate immediately? And how do we do it properly—especially in a remote workplace?
Let’s walk through the best practices every employer should understand.
A Quick Disclaimer: This article is for educational purposes only and does not constitute legal advice. Employment issues are highly fact-specific, and the examples discussed here are generalized and anonymized for confidentiality.
Why Documentation Matters More Than You Think
Documentation is not just an HR formality: it’s one of the most important tools an employer has to protect the business.
Clear documentation creates a record of expectations, warnings, and decisions. If an employee later challenges a termination, your documentation helps demonstrate that the decision was fair, consistent, and based on legitimate business reasons. Just as importantly, good documentation promotes transparency and accountability within your team.
How Much Documentation Is “Enough”?
There’s no exact rule. Employment law is very much a case-by-case analysis.
That said, the general rule of thumb is simple: document as much as reasonably possible. When employers run into trouble, it’s not because they documented too much; it’s because they didn’t document enough.
The Value of Progressive Discipline
In many situations, a progressive discipline approach is considered best practice. This typically looks like:
A verbal warning
A written warning
Additional written warnings if issues continue
In some cases, a suspension
Termination as a last step
Progressive discipline gives employees an opportunity to improve while also creating a clear record that expectations were communicated.
Do You Always Need a Performance Improvement Plan?
No. A performance improvement plan (PIP) can be a helpful tool for ongoing performance issues, but it is not legally required in every situation.
In some cases, especially where the problem is severe or involves misconduct, a PIP may not be appropriate at all. The key is matching the response to the nature of the issue.
When Immediate Termination Is Appropriate
While documentation and progressive discipline are best practices, there are situations where immediate termination is justified.
Examples include serious safety concerns, theft, or extreme lapses in professional judgment. In these cases, skipping intermediate steps is often reasonable—and necessary—to protect the business, employees, and the public.
Here’s a specific example: My colleague was working at a large law firm that had a culture of friendliness amongst the attorneys. One day, it went too far when two attorneys were playing around and began physically wrestling on the floor of the office. This was beyond inappropriate for the workplace, not to mention the danger it put these two (and their other coworkers) in. Because this was such an egregious error in professional judgment, the two attorneys were immediately terminated.
The takeaway here is that not all misconduct should be treated the same. Some behavior crosses a line that warrants immediate action.
Employee Files: What Small Businesses Should Be Doing
Small businesses sometimes assume that formal employee files are only for large companies. That’s a mistake.
Every employee should have some form of file, whether it’s paper or digital. What matters most is that documentation is centralized, consistent, and easy to track. Even a simple digital folder with emails, warnings, and notes can go a long way in creating a reliable paper trail.
Always follow up important conversations with something in writing. That written record can be invaluable later.
Common Documentation Mistakes Employers Make
The biggest mistake we see is not documenting issues early enough. Employers often assume a problem is a one-off or hesitate because the employee is otherwise likable or high-performing.
It’s important to document everything, even if the first mistake is minor and you believe the verbal warning will take care of the issue. Because, if mistakes continue to be made (or, worse, escalate), you’ll be really glad you have a record of the very first time the problem started. Say, for example, an employee is 10 minutes late for work. You might think it’s a one-off and may not say anything at all. The second time, perhaps you’ll issue a verbal warning and think that’s the end of it. But if it continues, and if you didn’t document those first few instances, you’ll have to “build your case” from a delayed position, since you didn’t record the issue originally.
Consistency is critical. Favoritism (intentional or not) can damage morale and undermine your position if a termination is challenged. Company standards should apply across the board. Documentation protects not just against legal claims, but against internal frustration and confusion as well.
How to Handle a Termination Meeting
Termination meetings should be structured, controlled, and respectful.
Who Should Be Present
Ideally, there should be:
One person leading the conversation
One neutral witness (such as the head of HR (if there is one and that person is not leading the conversation) or another senior management team member)
The goal is to avoid a “he-said, she-said” situation without overwhelming the employee. A 2-to-1 dynamic is usually appropriate. In very small companies, where bringing in another employee isn’t practical, outside legal counsel can serve as a neutral third party.
How the Conversation Should Go
The person leading the meeting should control the conversation. Termination meetings are not negotiations. Avoid drawing the discussion out or turning it into a back-and-forth that gives false hope or creates confusion.
Clarity and professionalism matter.
Remote Terminations
With remote teams now common, terminations sometimes happen over video. The same principles apply. Have a witness present, keep the meeting concise, and follow up promptly with written documentation.
A Note on At-Will Employment
In New York and many other states, employment is at will. That means employers can terminate employment for any lawful reason, as long as it is not discriminatory or retaliatory.
Because of this, you don’t need to provide extensive detail or justification during the termination meeting itself. Simplicity is often the safest approach.
Final Thoughts
Strong documentation and consistent processes make difficult leadership decisions far more manageable. When handled correctly, documentation protects your business, reinforces fairness, and reduces risk long before a problem escalates.
If you’re unsure how to handle a performance issue or termination, getting guidance from an experienced employment law attorney early can save significant time, stress, and expense down the road.
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Disclaimer: This article constitutes attorney advertising. Prior results do not guarantee a similar outcome. MGLS publishes this article for information purposes only. Nothing within is intended as legal advice.