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How to Develop a Disciplinary Action Policy

Kiely Kuligowski
Kiely Kuligowski

A disciplinary action policy helps prevent issues from affecting your employees and company, and can protect you from legal ramifications. Here's how to create one, plus helpful templates.

  • Disciplinary action in the workplace is any response to misbehavior or rule-breaking at work.
  • A disciplinary action policy identifies and standardizes procedures for responding to incidents that violate company policy.
  • The three main types of disciplinary action policies are progressive discipline, retraining and performance improvement plans (PIP), and reassignment or suspension.
  • This article is for small business owners, human resources professionals, and managers who want to learn what constitutes a disciplinary action policy and how they can create a policy for their company.

Though it's an uncomfortable subject, discipline in the workplace is often necessary. Companies need a disciplinary action policy. Before moving forward with implementing this type of policy yourself, it is important to understand what a disciplinary action policy is, when you might need one and how to develop one of your own.

What is a disciplinary action policy?

A disciplinary action policy identifies and standardizes procedures for responding to incidents that go against company policy. A well-written disciplinary action policy clearly states your company's rules and the consequences that happen if those rules are broken.

What should a disciplinary action policy include?

Your disciplinary action policy should include the following six components:

  1. Policy overview: This section explains the steps that will be taken to address employee misconduct or failure to perform.

  2. Statement of at-will employment: This portion of the policy states that all employees of your company work at will and can be terminated at any time, for any reason.

  3. The forms of discipline and the steps that will be taken: In this section, your policy should state each step that will be taken to address an issue and the form, or forms, of discipline that will be administered. Clearly state what each step will include and the reasons that will constitute moving the issue to the next step. This section should also explicitly state what the requirements are for managers, such as documenting each step of the process and keeping employees fully informed.
  1. Explanation of the steps in the disciplinary process and which infractions begin at which step: Include detailed descriptions of each step and what the employee can expect, as well as any infractions that will not follow the steps in chronological order. For example, tardiness issues may begin at step one, which involves the manager giving the employee a verbal warning, while major offenses will begin at step three, which might be suspension.

    "Include language that the policy is a guideline, not an absolute," Michael Coles, owner of The Coles Firm, told Business News Daily. "Employers should reserve the right to upgrade or downgrade discipline in the face of aggravating or extenuating circumstances."
  1. A statement regarding an employee's right to appeal a decision: Your policy should include a statement stating any employee who believes they were not treated fairly or properly can appeal disciplinary decisions to the appropriate party, such as HR. Outline the steps on how employees can appeal a decision.
  1. Statements that offer the company legal protections: You should also include legal protections for your business, as there are several potential legal ramifications if you do not carefully design your disciplinary policy. The Worker Adjustment and Retraining Notification Act (WARN), which only applies to businesses with 100 or more employees, and the National Labor Relations Act, which governs unionized employees, govern employee discipline and termination. To avoid legal issues, your disciplinary policy should:
    • Include a statement that protects your right to terminate employees at will
    • Inform employees about unacceptable behaviors
    • Provide consistent, fair discipline guidelines
    • Prevent managers from inconsistent, illegal or abusive discipline
    • Require documentation and collected evidence of employee behavior issues

Key takeaway: A disciplinary action policy identifies and standardizes procedures for responding to incidents that go against company policy. The disciplinary policy should include a statement that employment is at will, it should outline the discipline that will be taken, it should explain that employees can appeal a decision, and it should include statements that provide legal protections for your business.

What is disciplinary action in the workplace?

Disciplinary action in the workplace is any response to misbehavior or rule-breaking at work. All workplace rules should be outlined in your company handbook. Disciplinary action can range from a verbal or written warning to suspension or even termination, depending on the severity of the infraction.

"A disciplinary action policy is a framework for how an employer views various transgressions by employees and how the employer typically responds to them," Coles said. "It highlights what infractions are considered worse than others and outlines the possible discipline an employee might face."

Why is a disciplinary policy important?

A workplace disciplinary policy provides employees with clear guidelines for expected conduct and what consequences they can expect if the rules are broken. A disciplinary policy also:

  • Protects you and your company from allegations of wrongful termination
  • Ensures equal treatment of all employees if rules are not being followed
  • Outlines how employees can report grievances or incidents
  • Establishes a procedure for what is done in the event of rule-breaking
  • Identifies nonproductive or disruptive workers
  • Improves employee performance by identifying poor behaviors

Key takeaway: Disciplinary action in the workplace is any response to misbehavior or rule-breaking at work. A workplace disciplinary policy offers several benefits, including protecting your company from potential lawsuits, ensuring equal treatment of employees and identifying nonproductive workers.

What behavior constitutes disciplinary action at work?

Many behaviors can warrant disciplinary action, which is why you must outline all unacceptable behavior in the employee handbook. This helps avoid any confusion and potential legal action that could be taken by the employee claiming their behavior was not expressly prohibited. Behavior that may warrant disciplinary action at work can include:

  • Failure to perform their job function
  • Misconduct
  • Harassment or violence towards co-workers
  • Illegal behavior
  • Dress code violations
  • Inappropriate behavior with co-workers or customers
  • Attendance issues
  • Dishonesty
  • Discrimination

Key takeaway: Behaviors that can warrant disciplinary action at work include harassment, misconduct, illegal behavior, poor job performance and attendance issues.

Types of disciplinary action

The three main types of discipline available to employers are progressive discipline, retraining and performance improvement plans (PIP), and reassignment or suspension.

Progressive discipline

Progressive discipline is the most traditional form of workplace discipline. The severity of the corrective action is raised if an employee fails to correct the issue. It is a popular approach because it helps shield employers from legal action from the employee. However, this approach may not work for every employee. Rather than increase the severity of successive disciplinary actions, perhaps you may want to provide additional training or rehabilitative elements to improve the situation. The steps of a progressive discipline policy are as follows:

A verbal warning

A firm and clear verbal warning should be given when an employee first breaks a rule. Explain why the behavior was wrong and express an expectation that the behavior does not occur again.

"From experience, the most effective disciplinary action is a verbal warning from the highest authority," said Reuben Yonatan, founder and CEO of GetVoIP. "It conveys the seriousness of the issue, and employees tend to take a warning from the boss seriously."

A written warning

A written reprimand or warning is more detailed. It describes what the issue is, how the employee is expected to change their behavior to fix the problem and the consequences that will occur if they do not. The warning should be signed by their manager, a witness, and the employee and stored in the employee's file. You can issue multiple written warnings before progressing to the next step of the disciplinary process.

A final warning

This warning should state all the times the employee was warned and the corrective action that was, or was not, done to improve the behavior. It should clearly state that termination follows if there is no improvement.

Suspension/probation

A disciplinary suspension or probation is the final step before termination. It provides the employee with one last chance to improve their behavior. You can choose to implement check-ins or measurable goals at this point, reduce the employee's pay, or enact closer supervision.

Termination

This step is taken when all others have been exhausted. Here, you have a face-to-face meeting with the employee and review all applicable documentation of the issue, including all warnings, training documents, and notes and explain that the issue has not been fixed, and, therefore, the employee is being terminated.

Training and performance improvement plans

A PIP and training are rehabilitative approaches that seek to correct the issue using check-ins, measurable goals, and a plan in place if the employee does not meet outlined goals. This form of discipline may also end in termination.

"The best disciplinary action could be to hold a one-on-one meeting with the employee to address each problem on a more personal level," said Adil Ashraf, head of human resources at MotionCue.

Reassignment or suspension

This action is typically used in response to serious behavioral issues or in cases of severe conflict, where the employee can no longer remain in their position but termination is not an appropriate response. Reassigning the employee is a rehabilitative approach that requires retraining, and a suspension is a punitive approach that requires a certain condition be met before the employee can be reinstated.

Key takeaway: The three main types of disciplinary policies are progressive discipline, retraining and PIP plans, and reassignment or suspension.

How to develop a disciplinary action policy

Before you begin drafting your company's disciplinary action policy, decide on the goal you want to accomplish with the policy. Do you want to take a punitive or rehabilitative approach? How can you make the rules and consequences as clear as possible to your workers? Once you have your answers to these questions, there are six steps to drafting a disciplinary action policy:

  1. Consult with HR. If you have a human resources department, they can be a valuable resource in helping you develop a comprehensive policy. HR can also assist in collecting documentation and handling any appeals. If you do not have an in-house HR staff, you can use performance management software, which is a budget-friendly option that helps document employee behavior and manages employee reviews. [Read our related review: Best Performance Management Software] 
  1. Consult a lawyer. Ask a lawyer to review or help craft your disciplinary policy to ensure you're not leaving anything important out that could have negative legal consequences for your company in the future. "A lawyer will help you formulate a policy that is airtight and leaves no loophole for liability," said Yonatan. "If you do not have a company lawyer, you can contract one to help you formulate the policy."
  1. Include all company policies and rules. This is not the place to be brief – include all of your policies and rules so it is clear to employees what is expected of them. Describe each rule in as much detail as possible so there is little room for interpretation.
  1. Describe the method and steps of discipline. Again, include as much detail as you can as to what steps will be taken during discipline and what types of infractions apply to which step of the disciplinary process.
  1. Include a process for documentation. Describe how the disciplinary process will be documented at every stage and include expectations for both managers and employees.
  1. Describe the process of termination. If a disciplinary process results in termination, it should be made clear in the policy how the termination will be enacted and what the employee can expect. Include what will happen during and after the termination, such as returning company property, closing out accounts, etc.

Key takeaway: There are six steps to developing a disciplinary action policy. Work with your HR department, or if you don't have an HR department, consult an attorney to craft a policy. The final policy should be detailed and comprehensive.

Examples of disciplinary policies

Here are three helpful templates and examples you can use as you create your company's disciplinary action policy.

  1. BetterTeam: BetterTeam's sample disciplinary action policy allows you to fill in the blanks to fit your company. You can also add further information where needed.
  1. Workable: Workable provides an example of its disciplinary action policy. Notice the level of detail in describing who the policy applies to, the actions that may be taken, and the expectations required of both employees and managers.
  1. Employment Law Information NetworkThis sample discipline policy uses the progressive discipline process and provides detailed information on each step of the process. It is complete with the severity of each stage and a suggested length of time taken between each step.
Image Credit: MangoStar_Studio / Getty Images
Kiely Kuligowski
Kiely Kuligowski,
Business News Daily Writer
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Kiely is a staff writer based in New York City. She worked as a marketing copywriter after graduating with her bachelor’s in English from Miami University (OH) and now writes on small business, social media, and marketing. You can reach her on Twitter or by email.