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Disciplining Your Workers Requires a Legally-Sound Policy

Filed under Managing the Workplace. Fact checked on May 24, 2012.

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Disciplining workers is rarely pleasant but sooner or later, it is a reality for just about every employer. Whether you're dealing with minor work rule infractions to the most severe of offenses or somewhere in-between, having a discipline program in place can help make the process less painful and avoid possible legal complications.

If your small business has employees and therefore, workplace rules, at some point these rules are bound to be broken by one of your employees. When this happens, you'll likely have to enforce the rules with some form of discipline.

In most small businesses, enforcement of rules is done on a casual basis. For example, if someone is spending too much time on the phone taking personal calls, you'd probably just aim a few well-placed hints in his or her direction. If that doesn't work, you might informally take the person aside and explain to them how this affects your business and the person's value as an employee.

When you're working closely with someone on a daily basis, it's usually best to talk to them about any behavior that is inappropriate, without waiting until the problem gets so bad that you need to issue a formal warning. Sometimes employees are unaware of what they've been doing and what you expect of them, and a few words will be enough to set them on the right track. Keep the lines of communication open and flowing in both directions, so that your employees can discuss their concerns and problems with you as well. If you deal with small problems as they arise, you can often avoid the big blowups that can occur when bottled-up feelings are finally let loose.

Sadly, open and frequent communication doesn't always do the trick. In fact, if you have more than one or two workers, it's almost certain that at some point you will have to discipline an employee for something, but don't wait until then to set up a program. Employees need to know the consequences of bad behavior or poor performance before it happens.

Work Smart

Discipline doesn't mean automatic termination. In all but the most serious cases, you'll want to try to avoid terminating employees, especially if they are good workers. In fact, terminating a worker without some form of discipline policy and procedure could land you in court. Without a clear policy and evidence that the policy was used for the terminated employee, you could end up in a "your word against the employee's" situation.

Setting Up a Discipline Program

What makes a good disciplinary system? More than anything else, a good disciplinary system is the result of having a clear idea of what you want to accomplish with your disciplinary system. Do you want to punish or do you want to correct and educate?

In formulating your discipline philosophy and program, consider:

  • which basic steps and features a discipline program should contain
  • whether progressive discipline would work for you
  • whether regular performance reviews can avoid the need for much disciplinary action

Elements of a Discipline Program

An effective, comprehensive, and successful discipline program should contain the following elements:

  • Code of conduct. Employees should know the difference between expected and unacceptable behavior. Ideally, this should be in writing in a list of basic, general work rules or an employee handbook or other material provided to the employee.
  • Philosophy. Employees should know what you expect to achieve through disciplinary action.
  • Knowledge of disciplinary punishments. Employees should know the penalty you will impose for common offenses of the code of conduct.
  • Standardized disciplinary procedures. Employees should know that the steps and the sequence in which they occur in the disciplinary process will be the same for everyone. If you put the steps in writing ahead of time, make sure that you follow the steps that you outline for employees. Don't include steps in the process that you may not take every time, like "the company will give an oral warning." There may be times when an oral warning is not appropriate, but if you include it, employees can reasonably expect you to take that step regardless of the circumstance.
  • Quick response. Employees should expect a quick response to violations.
  • Appeal procedure. Employees should have the opportunity to voice their side of the story. While a full-blown appeal procedure may not be practical, you should at least give them a fair hearing before disciplinary measures are taken.
  • Reservation of rights. If you have a written policy, you should include a statement that the policy is to be used as guidance and that you reserve the right to modify the policy in any way should the circumstances require that you do so. While this statement would not allow you to ignore your policy, it would notify the employee that there may be circumstances that will be treated differently. It can also be useful if an employee disputes the appropriateness of a particular disciplinary action based on his or her interpretation of the wording of the document.

Ensuring fair discipline. Keep in mind that a system that is viewed as fair by the employees who must live under it is more likely to receive their support and cooperation. A fair policy also means that discipline must be applied consistently to all employees in an unbiased way. A fair policy does not mean a lax policy - discipline can be serious and even harsh, but fair. Fair discipline is also easier to defend and justify in court, should the need arise.

A basic foundation of fairness in discipline is:

  • giving an employee notice that there is a problem
  • providing an opportunity for the employee to change behavior, possibly through coaching

In this philosophy, the purposes of discipline are to:

  • put a stop to the unacceptable behavior
  • retain the employee as a productive member of the business

Systems designed to punish rather than educate are much more likely to be viewed by employees as arbitrary and unfair than those designed to educate and correct. That's in part because disciplinary systems designed to educate and correct are less likely to use the ultimate form of discipline - termination - until after an employee has been disciplined less severely in a series of progressive steps.

Progressive Employee Discipline

There will be times when an employee violates a policy or standard of conduct that will require immediate termination. However, in most cases, the problems aren't that serious, or at least they don't start out that way. In many situations, a minor sanction or coaching can be the answer.

But what about the employee who continues to break rules or ignore work policies or continues to have performance problems? While your immediate impulse may be to terminate the employee, there is an alternative that allows you and the employee every chance to salvage the employment relationship before you resort to termination. That alternative is known as progressive discipline.

What is progressive discipline? Progressive discipline is a discipline system where the severity of the penalty increases each time an employee breaks the rules. Typically the progression is from oral warnings to written warnings to suspension and, finally, to termination.

Is progressive discipline realistic for small businesses? There are advantages to using progressive discipline, especially when it's used in conjunction with a set of work rules (that are thoroughly communicated to employees) and an explanation of the disciplinary system.

For very small businesses, progressive discipline may be too time consuming to use, especially if discipline are problems rare. Or, you may decide to use it only for the most common rule infractions, such as unexcused absences or tardiness. Before you adopt a progressive discipline system, you should understand how progressive discipline works, including its advantages and disadvantages, and how to develop a policy of your own.

How Progressive Discipline Works

In a progressive discipline system, the severity of the penalty increases with each infringement of the rules. Typically, the progression is:

  1. oral warnings
  2. written warnings
  3. suspension
  4. termination

Elements of a progressive discipline system. A progressive discipline system contains the following elements:

  • Both you and the employee know in advance, to the extent possible, the appropriate discipline for the violation of a specific work rule.
  • The degree of discipline is greater for repeated offenses in a given time frame.
  • All violations are treated the same unless there are unusual mitigating or aggravating circumstances.

Usually, after a specified time period (like six months or a year) passes without another infraction, the worker gets a "clean slate." Any later infractions will start the process again with an oral warning.

Warning

Some cases of misconduct are so severe that you may skip the first one, two, or even three steps. For example, assaults or fighting, stealing, intoxication on the job, gross insubordination, destruction of company property, etc., may all justify immediate action. But don't fire the worker on the spot! Firing someone is a serious action, not to be done off the cuff. Sometimes situations are not as they appear. Give yourself some time to investigate, and, at a minimum, to be sure of what really happened and who was responsible.

Progressive Discipline Pros and Cons

While a progressive discipline system may seem like a high-maintenance way to control employee behavior, it does have definite advantages. For instance:

  • The existence of a progressive step-by-step discipline system conveys to employees that you're not out to nail them to the wall at the first sign of trouble.
  • The existence of an adequately communicated progressive disciplinary system keeps employees informed of where they stand.
  • Having a definite and consistently applied disciplinary system ensures employees who never need to be disciplined that those who do need to be disciplined will be.
  • A progressive discipline policy provides the business with a system that is fair and easily defensible against a challenge.

These advantages are compelling ones, especially for businesses trying to build and sustain high employee morale. As is true with most policies, though, there are also some disadvantages to progressive discipline.

Progressive Discipline Disadvantages

Progressive discipline can be an involved process. For very small businesses, it may be too involved to invest time in, especially if there are few discipline problems. Here are some of the other downsides of progressive discipline:

  • A progressive discipline system requires that everyone with disciplinary authority be trained, fully knowledgeable of the policy, and willing to assume responsibility for administering the discipline steps.
  • There may be a lot of documentation and follow-up work necessary to administer the plan.
  • You need to have a formal, written policy. This policy need not be distributed to the employees, but you'll have to have it so that you can be sure it's followed consistently.
  • You run the risk of guaranteeing a process that must be followed. Even if you don't print up the policy and give it to employees, you would be, in effect, telling employees how far they can go. In the event of a challenge, this information can be subpoenaed. Thus, it could be shown in court that your actions differed from your own written policy, which always makes you look bad.
  • To the extent that areas of employee conduct are governed by a progressive discipline system, generally the at-will status of employees may be altered.
Example

You make an exception to the at-will status of employees when your policy says, in effect, that they will not be subject to immediate termination for the specific disciplinary infractions included in your progressive discipline policy. Therefore, if absenteeism is one of the disciplinary infractions covered by your progressive discipline policy, you should follow your policy in disciplining an employee for absenteeism unless there are unusual mitigating circumstances.

  • In a very small business, it is a particular hardship to keep a problem employee around after several incidents of improper behavior, and suspending an employee can literally cripple the businesses.
  • Employees may not be discharged for covered infractions until the entire process is complete.

Formulating a Progressive Discipline Policy For Your Business

If you decide to implement a progressive discipline policy, you will need to formulate a written policy, even if you do not give it to the employees (and we recommend that you don't).

In creating your progressive discipline policy, follow these guidelines:

  • Tailor the progressive discipline system to the business. Other business's policies may serve as excellent models but be sure your policy is appropriate for your business and your employees.
  • Specify which behaviors or infringements of work rules are not subject to progressive discipline (usually these will be serious behaviors that warrant immediate termination).
  • Decide whether to advise all employees of the policy, what your progressive discipline steps are, how the policy is to be applied, and what the policy does not address.
  • Decide how you will maintain documentation (i.e., memos about oral warnings, written warnings, etc.).
  • Decide if documentation will remain in a file forever and, if not, under what circumstances and timing the documentation can be removed.
  • Establish a procedure for maintaining the documentation and protecting the confidentiality of the information.
Tip

If a suspension is one of the steps in your policy, consider the concept of suspended layoffs - layoffs or suspensions that are imposed on the employment record but are not actually enforced. This allows the next step to be termination but does not reward the employee with time off. In any event, suspensions should not be allowed to be taken with vacation or other paid or unpaid time off, including holidays.

Behaviors that are commonly excluded from a progressive discipline approach and that subject the employee to immediate discharge might include the following:

  • possessing or consuming non-prescribed narcotics on company property
  • reporting to work intoxicated/impaired
  • instigating a fight on company property
  • carrying a weapon without a business purpose on company property
  • theft
  • intentional harassment, including sexual harassment
  • destruction of property
  • insubordination
  • misrepresentation of important facts in seeking employment
  • violation of confidentiality or sharing of trade secrets outside the business
  • extended unexcused absences
  • gambling on company property

If you exempt these behaviors from your progressive discipline policy, be sure that you act on each occurrence of the behavior consistently. For example, if you specify suspension or termination as discipline for gambling and you do not allow any exceptions, then you must apply that rule to all forms of gambling, including office football pools.

Tools to Use

The Business Tools contain a package of documents that will help you formulate, administer, and document a progressive discipline program, including a checklist for creating a progressive discipline, a sample policy, and sample forms to help you administer the program.

Should your policy be in writing for employees? We do not recommend that you put your system in writing for employees to see unless you have first consulted your attorney. Just be sure that you (and any other managers in your company) know what it is, and make every attempt to follow it.

Work Smart

In the same vein, while many large corporations include their disciplinary system in an employee handbook that they give out to workers, for a small employer, putting these rules in writing for employees may cause more problems than it solves.

If you include them in a handbook, you must be extremely careful of the language used (it's best to have an employment lawyer review it). Also, you must be certain that you follow your own rules to the letter, each and every time an incident arises. If you have only a handful of employees and problems are rare, you may have a hard time remembering what you were supposed to do. Finally, it becomes difficult to fine-tune your system as you gain more experience over time because the first written system you give to employees can create a legally enforceable expectation that it will not change.

Conducting Regular Performance Reviews Helps Assess Employees

While progressive discipline is designed to address the problem of employees who break work rules, it is not very effective when dealing with an employee who doesn't violate any rules, but is incompetent or is not performing work to an acceptable level.

For example, you may have a worker who can't seem to get much done or who keeps making mistakes that cost you a lot of money. Your business's survival demands that you get rid of this person. What do you do?

Assuming that the person has been with you for a while and that any new-hire probation period has passed, you can resolve this problem by establishing periodic performance reviews.

The easiest way to do this is to take some time every six months or so to meet with each employee and evaluate his or her work. During the meeting you should go over your expectations for the job the employee holds, and discuss how he or she is meeting these goals. If the employee is not meeting expectations, you should make clear exactly what he or she needs to do to correct performance, and give a time limit for improvement. If the employee needs further instruction or job training, explain how this can be achieved. Finally, write a memo for the employee's file describing your conversation, and have him or her sign and date it.

Warning

You should be aware that performance reviews can be a two-edged sword. A fired worker can use good appraisals as proof that he or she was not fired for incompetence, but for some reason such as racial, age, or gender discrimination. One of the worst positions you can be in is to fire an employee for poor performance, but have five years of appraisals that rate the employee as a good worker.

Hopefully, with this kind of feedback, your employee will be motivated to shape up. If sufficient improvement does not occur after a few negative reviews, at least you'll have proof that you tried to be fair. Only you can decide how many chances to improve you'll allow before dismissing the person, but you should consider factors such as the employee's length of service, whether good reviews were given in the past, and the seriousness of the employee's mistakes.

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