Welcome to the time of year when it becomes ever so clear who you wished no longer worked here. But before you finalize your list of those good and bad employees, learn these lessons from terminations past.

Too small to fail

It may be that 50 percent of first marriages end in divorce, but how many first jobs end before the employee retires? And my guess is the likelihood of separation increases with each job just like with each marriage.

No organization is too small for documentation — specifically offer letters and termination letters. So why do so many employers skip out on arguably the two most important pieces of paper?

Oftentimes they believe they are too small, too close-knit or too much like a family to need it. But just like any other major decision where emotions are involved, it is easier for all parties if there is documentation on which to fall back.

For example, a small firm hired me after they were sued by an ex-employee because their lawyer recommended it. The employee, previously a close friend to the founder/CEO and his wife (who was at one time the office manager) had dined, traveled and otherwise socialized with this employee all the way up until they had to let him go because of poor performance. It all seemed to end amicably with the employee feeling bad about letting his friends down.

However, less than a month after sitting home, unemployed and getting angrier about not having a job, he began to blame his once-friends for his situation. Despite being a white male, under 40 with no protected status, it took him little time to find a lawyer to take his case on contingency.

As unfounded as his claims were, it took the company more than a year, thousands of dollars in legal bills and more thousands in a settlement to put the issue to rest. The major problem? There was no clear offer letter and no termination agreement for the owner to point to as a defense clarifying the employee's responsibilities.

There was, however, plenty of documentation in the accounting records showing how he was spending lots of time outside the office with the CEO — which helped the ex-employee's argument that he was integral to the firm and that the CEO was trying to cut him out of the profit sharing he was promised. Even though his story was complete fiction, the little documentation that existed supported his story more than what the CEO said.

The bottom line? Write it down. Terminations are easier when there is an offer letter. Don't have one? Get one. It's not too late to give your employees documentation to clarify their responsibilities.

And do not believe for a minute that you are too small, too friendly or too informal for a separation agreement. The simple fact is, most terminated employees are happy to be offered some money when they leave, and most employers will pay a lot less fulfilling a separation agreement than fighting any post-termination lawsuit no matter how frivolous the accusations may be.

Check in to learn more about common termination mistakes in our next article in this series.