How to Develop a Disciplinary Action Policy

What is a disciplinary action policy?

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

A disciplinary action policy should include the following six components:

1. Policy overview: This section explains the steps the company will take 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 are at-will employees and can be terminated at any time for any reason.
3. Disciplinary steps and measures: In this section, you’ll list each step the company will take to address issues and the disciplinary measures involved. Disciplinary action can range from a verbal or written warning to suspension or even termination, depending on the severity of the infraction. You must delineate each step and state how, why and when the issue will move to the next step. This section should also explicitly state manager requirements, such as documenting each step of the process and keeping employees fully informed.
4. Disciplinary process explanation: You must include detailed descriptions of each step in the disciplinary process and what the employee can expect. You must also explain that some infractions won’t follow the steps chronologically. For example, tardiness issues may begin at step one, which involves the manager giving the employee a verbal warning. However, significant offenses may begin at step three, which might be suspension. “Include language that the policy is a guideline, not an absolute,” advised Michael Coles, owner of The Coles Firm. “Employers should reserve the right to upgrade or downgrade discipline in the face of aggravating or extenuating circumstances.”
5. An employee’s right to appeal a decision: Your policy should include a statement explaining that any employee who believes they were not treated fairly or properly can appeal disciplinary decisions to the appropriate party, such as human resources (HR). Outline the steps employees would take to appeal a decision.
6. Company legal protections: You should also include legal protections for your business; several potential legal ramifications may occur 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, are labor laws that 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

Why do you need a disciplinary action policy? 

Disciplinary action policies are crucial communication tools that ensure HR compliance. “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 explained. “It highlights what infractions are considered worse than others and outlines the possible discipline an employee might face.”

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 does the following:

• 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, disruptive or disrespectful workers
• Improves employee performance by identifying poor behaviors

How do you develop a disciplinary action policy?

Before drafting your company’s disciplinary action policy, decide on the goal you want to accomplish. Do you want to take a punitive or rehabilitative approach? How can you make the rules and consequences as straightforward as possible for your workers?

Once you have your answers to these questions, follow these six steps to draft a disciplinary action policy:

1. Consult with HR: An HR department or dedicated HR person can be a valuable resource in helping you develop a comprehensive policy. HR can also assist in collecting documentation and handling appeals. If you do not have in-house HR staff, consider using performance management software, a budget-friendly option that helps document employee behavior and manage employee reviews. 
2. Consult a lawyer: Ask a lawyer to review or help craft your disciplinary policy to ensure you’re not leaving out anything important that could have adverse 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,” advised Yonatan. “If you do not have a company lawyer, you can contract one to help you formulate the policy.”
3. Include all company policies and rules: This is not the place to be brief ― include all 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.
4. Describe the method and steps of discipline: Again, include as much detail as possible as to what steps will be taken during discipline and what types of infractions apply to which step of the disciplinary process.
5. Include a process for documentation: Describe how the disciplinary process will be documented at every stage, including expectations for managers and employees.
6. Describe the process of termination: If a disciplinary process results in firing an employee, the policy should make clear 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.

What behavior warrants disciplinary action at work?

Many behaviors can warrant disciplinary action, which is why you must outline all unacceptable behavior in the employee handbook. Listing all potential workplace infractions helps your business avoid any confusion and potential legal action an employee could take if they claim their behavior was not expressly prohibited. Behavior that may warrant disciplinary action at work can include the following:

• Failure to perform their job function
• Misconduct
• Workplace harassment or violence toward co-workers
• Illegal behavior, such as employee fraud
• Dress code violations
• Inappropriate behavior with co-workers or customers
• Attendance issues
• Dishonesty
• Discrimination

What are the 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. Instead of increasing the severity of successive disciplinary actions, perhaps you may want to provide additional employee 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,” noted 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 the issue, how the employee is expected to change their behavior to fix the problem and the consequences 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 taken to improve the behavior. It should clearly state that termination follows if there is no improvement.
• Suspension or 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; therefore, the employee is being terminated.

Training and PIPs

A PIP and training are rehabilitative approaches that seek to correct the issue using check-ins, measurable goals and a plan if the employee does not meet the 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,” advised Adil Ashraf, head of HR at MotionCue.

Reassignment or suspension

These actions are typically used in response to serious behavioral issues or cases of severe workplace conflict. 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; a suspension is a punitive approach that requires a specific condition to be met before the employee can be reinstated.

Disciplinary policy template

Here is an original template for a disciplinary action policy you can reference when writing and customizing yours.

Policy overview

[Company name]’s disciplinary policy outlines the appropriate disciplinary actions that will be taken to address any poor employee performance or misconduct, as well as any other employment-related problems. Some example behaviors or issues include failure to perform job functions, misconduct, harassment or violence toward co-workers, illegal behavior, dress code violations, inappropriate behavior with co-workers or customers, attendance issues, dishonesty and discrimination. This policy applies to all employees at [company name]. 

At-will employment

Regardless of the disciplinary action policy, [company name] employees work at will and [company name] holds the right to terminate an employee at any time for any reason.

Disciplinary steps

[Company name] will adhere to the following disciplinary steps:

• Progressive discipline
• Verbal warning
• Written warning
• Final warning
• Suspension/probation
• Termination
• Retraining and PIPs
• Reassignment or suspension

Depending on the offense, further steps might be taken and will be explained to the employee. Managers will document the steps and file with HR. 

Explanation of the steps

[Provide a detailed explanation of each step listed above, including which infractions begin at which step.]

This disciplinary action plan may start at any step, depending on the nature of the offense. For example, tardiness will start with a verbal warning, while violence will immediately result in suspension or termination. This will be explained to the employee at the beginning of the disciplinary action process.

Right to appeal

Any employee who believes they are facing unfair treatment can appeal the disciplinary process with HR. 

[Outline the steps on how employees can appeal a decision.]

Legal protection

[Include any legal protections for your business.]

Implementing your disciplinary action policy

When it’s time to implement your disciplinary action policy, explain your employee’s misbehaviors, detailing the severity of the offense and which disciplinary step you will begin with. Document all the information and file it with HR, then communicate the process to the employee so that everyone is on the same page.

Sammi Caramela contributed to this article. Source interviews were conducted for a previous version of this article.