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Laying Off or Firing Employees

When your business requires employees, you have to be prepared for lay-offs and terminations, as well as hiring and recruitment. As an employer, it is therefore wise to familiarize yourself beforehand with the basics of Pennsylvania employment law.


When termination of an employee seems like the only option, consider these questions before you take action:

  • Have you warned the employee about his or her inappropriate conduct or poor performance? Has the person had an opportunity to correct the situation?
  • Have you fired other employees for similar actions or performance deficiencies? Are you being fair?
  • Is the employee protected by employment discrimination laws? And have you treated employees who are not members of protected groups in the same way?
  • Are there other disciplinary actions you can take besides firing?

If you do choose to fire someone, be sure to conduct an exit interview in which you:

  • Explain why they are being fired
  • Handle administrative matters, such as the employee’s final paycheck
  • Document the conversation (as well as any of the above actions taken) for your records.

If you are having difficulty with an employee, keep track of what has transpired and the dates on which you spoke to the employee about their performance. After termination, if legal complications arise you will have a record of what happened.

Employers must pay fired employees any earned and unpaid compensation on or before their next regular payday.


It’s usually better for your business and the community to avoid layoffs whenever possible. Consider such options as offering reduced hours or wages to minimize the impact on workers and their families.

If layoffs are the only solution, you may have a legal obligation to let workers know in advance. More information about notification requirements as well as resources available to help employees transition is available on the closing a business page.

Unemployment Compensation

Employees released from employment through no fault of their own or because conditions beyond their control forced them to quit , may be eligible for unemployment benefits. (An employee fired for just cause, such as stealing, cheating, ignoring safety cautions, or harassment or discrimination against co-workers, may not be eligible for unemployment compensation.)Employers are required to pay quarterly tax payments to contribute to the Unemployment Compensation Trust Fund, and in certain years, to withhold a portion of employee wages to be added to the fund. To assist your employees with collection of unemployment benefits, be sure to give them Form UC-1609P at the time of layoff.

Visit the Department of Labor & Industry Unemployment Compensation / Employer Services section for further information.

Whether or not you are liable for the payment of unemployment contributions, it is mandatory to maintain accurate, up-to-date employment and payroll records, cash books, journals, ledgers, and corporate minutes.


Employees who have been laid off or fired, and who were receiving healthcare coverage through your employee benefits program, may be covered under the COBRA or mini-COBRA laws that allow people the option to continue receiving medical coverage at their own expense for a certain period of time after termination. The American Recovery and Reinvestment Act of 2009 (ARRA) calls for a portion of COBRA medical coverage to be subsidized; learn more about this from the US Department of Labor.The COBRA law applies to employees of larger businesses (20 or more employees), while Mini-COBRA covers employees of smaller businesses and for a shorter period of time.

For questions about Mini-COBRA and COBRA coverage call the Pennsylvania Insurance Department at (877) 881-6388.