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Open Core Ventures Handbook/🌔Terminations

Terminations

Founders please see detailed instructions here

Voluntary

Voluntary termination is when an employee chooses to leave the company at their will.
In countries without at-will employment, the company may require a statutory notice period to determine the employee's last working day which may impact when an employee’s termination date would take place.
It is possible that an employer may want to release an employee seeking voluntary termination prior to the employer’s potential minimum guaranteed notice at their request. In such scenarios, the employer should check in with the EOR about locally compliant options (though a two week notice is recommended to ensure a smooth transition, see below).
It is also possible that employees may be able to exercise a minimum notice period to determine their termination date. Employers should review the employee’s locally compliant employment contract and seek guidance from the EOR on local regulations.
If there is no notice period included in the employment contract, the employee should provide the company with two weeks' notice to ensure a transition progresses smoothly.
See some examples showcasing considerations regarding the timing of voluntary terminations in the following diagram.

Involuntary

Involuntary termination will take place when an employer terminates an employment due to various reasons such as underperformance, unethical, dishonest, or illegal behavior, making other team members or customers feel unsafe in their work environments, or major strategic shifts in company strategy or financial position.
Involuntary terminations should be handled with care and follow a clear process to ensure that the employee is treated with respect and dignity. It is important to document the reasons for termination and follow any legal or contractual obligations such as providing notice or severance pay. Employers should review the employee’s locally compliant employment contract and seek guidance from the EOR on local regulations.
 
For founders only: Details on how to initiate a termination can be found here

Reduction in force (RIF)

There is no specific legal definition of "reduction in force" (RIF), but it generally refers to a process by which a company reduces its workforce, often due to financial or strategic reasons. This can involve laying off employees, terminating contracts, or not renewing contracts, for specific functions or company-wide.
Companies undergoing RIFs should consult with employment and legal counsel in planning their separation processes. For example, the WARN Act, and/or other employment laws may need to be taken into consideration.
Communicating a RIF to employees should only be done once all legal and logistical details are completed. All termination paperwork needs to be completed before letting anyone know they have been affected. It’s incredibly important to have a communication plan in order before you make any announcement. For a RIF scenario, your communication plan may include:
  1. Two scripts: one for communicating to affected employees, and one for communicating to non-affected employees if you plan to make the announcement in person to each group.
  1. A written announcement to be shared via email, slack, or both announcing the RIF and any necessary next steps. This should be done after affected employees have been notified.
See the communication plan section and additional considerations below for more details.
Additional resources: Cooley’s Checklist for Reductions in Force.

Company wind down

In the event that a company is shutting down, reductions in force may have additional considerations to account for. See additional processes and considerations at
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Company Wind Down.

Responsibilities and strategies for involuntary terminations

The management team is responsible for planning and executing involuntary terminations in ways that are compliant with applicable employment laws and regulations while treating impacted individuals respectfully.

Separation planning

In planning separation packages and timing, keep in mind that corporate officers have a fiduciary duty to the business and company investors.
OCV will provide input into planning separations and approve any restructuring of the company including dissolution.
Planning around involuntary separations may resemble the following steps.
  1. Create a separation plan:
    1. Identify impacted individual(s)
    2. Understand and document the company’s legal and contractual obligations around the separation (for example: payment for work completed, accrued vacation payout, any mandatory holiday allowances, and probation period end date, notice period and severance requirements, etc. - see additional considerations below)
      1. Determination of these obligations will be solicited through a request to the company’s PEO.
    3. If applicable, make a proposal for total payments associated with termination including severance or separation incentives intended for employees and any other resources which may be appropriate given the context of any obligations.
      1. Any payments and incentives must be associated with a release of claims.
      2. Legal and contractual requirements and recommended payments along with other considerations can impact what is reasonable to offer in a package.
    4. Create a communication plan
    5. Determine the timing of the announcement/communication. There may be legal requirements or associated considerations which should be accounted for in such planning.
    6. Protect company resources (for example, turn off access to company systems)
  1. Review separation plan with legal counsel and continually seek guidance from PEO partners where appropriate.
  1. Review draft release of claims and termination agreements
  1. Schedule employee meeting(s) - ideally, any separation paperwork should be available at the time of communication
  1. Sign agreements and save these in the company’s HR files

Considerations in involuntary separations

It is important when planning involuntary separations to be mindful of local legal requirements, contractual obligations, and employee specific considerations. See the following page for more details on some considerations which may factor in.
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Considerations in involuntary terminations

Communication plan

Effectively communicating a large-scale layoff, or RIF is crucial for both showing respect and compassion for affected employees and maintaining company morale. An effective communications plan should adhere to the following guidelines: early planning, consistent messaging, and providing a transparent rationale.
Start planning early. Once it’s decided that a RIF is necessary, start planning how this is going to be communicated. Pull in only the necessary stakeholders to help draft a communications plan. Things to consider when starting your plan:
  1. How will impacted employees be notified? 1:1 communication is preferred in this scenario.
  1. How will you communicate the RIF company-wide, after affected individuals have been notified?
    1. In the case of a
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      Company Wind Down       driving a RIF, it may be worth having company wide communications prior to specific 1:1 communications
  1. Does anyone else need to be directly notified about the change?
Be consistent with messaging and provide rationale for the decision
  1. Draft an FAQ and update it as you are sorting out logistics.
  1. Include the rationale behind the decision. Be as honest and transparent as possible but do not give any confidential details. Include any other alternative options that were considered and/or taken and why it was necessary to take this particular course of action.
  1. Do not provide details of any affected individuals to the wider company
    1. To avoid misclassification, any potential incentives associated with contractors will be termination payments (not severance) and should only be referred to as such.
 
 
 
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