Search form

These Guidelines are not intended to and do not create a contract of employment.
Policies and guidelines may be revised at any time at the employer's sole discretion.

Following these guidelines is a requirement in order to invoke defense costs coverage (up to $1,000,000) under the NATIONAL ASSOCIATION OF REALTORS®' Professional Liability Policy for wrongful termination claims. Such coverage applies to suits arising from hiring, firing, compensation, employee privileges or other terms of employment.


Performance reviews are an excellent opportunity to provide feedback to your employees. In a performance review, you should discuss both the employee's outstanding accomplishments and those behaviors that need improvement. You and your employee should set goals to be met by the next performance review. Such goal setting is a good motivating technique that makes employees feel they have a say in their work. Frequent performance reviews can also help you catch misguided behaviors before they develop into major problems. Your positive attitude toward performance appraisals can make them rewarding experiences for both you and your employees.

Review all new, transferred, or promoted employees six (6) months after the starting date in the new position. You should schedule the employee's second performance review six (6) to twelve (12) months after the first, and the third and subsequent reviews on an annual basis thereafter. You may conduct additional performance reviews if the employee's performance or behavior warrants it.

All performance appraisals must be documented in writing and signed by the employee. Keep in mind that performance reviews do not necessarily require wage and salary adjustments.


You must discipline employees in a uniform and progressive manner. This means you should follow set steps when disciplining poor employee performance and violation of any standards of conduct which you have developed. The steps, arranged in order of their severity, are:

1. Verbal Warning
2. Written Warning
3. Probation
4. Suspension

Your decision on which step to take depends on the nature of the violation or performance problem, its seriousness, frequency, and the employee's record.

Verbal Warning

For many minor infractions or performance problems, you only need to give the employee a verbal warning to correct the situation. You should meet with the employee as soon as possible after the problem, and in the conversation, clearly explain the violation or performance problem. Next, tell the employee why it is a violation or problem and discuss the future behavior you expect of the employee.

You should note in writing the date, time and content of your conversation for future reference. If the employee repeats the behavior, or if the situation doesn't improve within a reasonable period of time (this depends on the seriousness of the infraction), you may repeat the verbal warning or proceed to the next step in the process.

Procedure: Administering a Verbal Warning

1. Meet with the employee.

2. Explain the nature of the violation or the performance problem. Discuss the problem and its resolution with the employee.

3. Describe the future behavior you will expect of the employee.

4. Note the date, time, and content of your conversation in writing.

5. If the employee repeats the behavior, either give another verbal warning or administer the next disciplinary action, the written warning.

Written Warning

The next step in progressive discipline is to issue a written warning. Use written warnings if an employee:

continually repeats minor violations
has performance problems that have been unresolved by verbal warnings
violates more serious standards of conduct
has major performance problems

In this memorandum, you should describe in detail the facts involved in the infraction or performance problem. Also, outline the behaviors and objectives that you expect of the employee by a specified time in the future.

Have the employee sign the memorandum. This shows that the employee has received, acknowledged, and understood the memorandum. This does not mean, however, that the employee has necessarily agreed with its contents.

Allow the employee to make a written response.

Next, send a signed copy of the written warning (with the employee's response, if any) to the employee's personnel file. If the situation does not improve within the specified time period, you may need to repeat the written warning or take the steps required for probation, suspension, or discharge.

Procedure: Issuing a Written Warning to an Employee

1. Create a written memorandum in which you describe the facts involved in the problem.

2. Meet with the employee to discuss the memorandum.

3. Have the employee sign the memorandum acknowledging his receipt and understanding of it.

4. Allow the employee to offer a written response to the warning.

5. Put a signed copy of the memorandum (with the employee's response, if any) in the employee's personnel file.


In most instances, you should use this disciplinary action if the verbal and written warnings did not result in improved behavior and work performance. To place an employee on probation, you must again prepare a memorandum that explains the reasons he or she is being placed on probation. Also, specify the following:

the length of the probationary period
the behaviors or level of job performance expected during and by the end of the probationary period
the consequences of failing to meet the expectations by the specified time

The usual consequence of the employee failing to improve is to consider discharge or to actually discharge the employee.

Meet with the employee and discuss the contents of the memorandum. Have the employee sign the memorandum, acknowledging receipt and understanding of its content. The employee may provide a written response.

Put a signed copy of the memorandum along with a copy of the employee's written response, if any, in the employee's personnel file.

Procedure: Placing an Employee on Probation

1. Prepare a memorandum explaining why you are putting the employee on probation.

2. Meet with the employee and discuss the contents of the memorandum.

3. Have the employee sign the memorandum to acknowledge receipt and understanding.

4. Let the employee provide a written response.

5. Put the signed copy of the memorandum along with the employee's response, if any, in the employee's personnel file.


Suspension can be used as a disciplinary action if your verbal and written warnings and probation failed to correct the problem. However, suspension is most often used when an incident warrants immediate action. In such a case, you can suspend the employee without pay for a specified time, pending investigation of the occurrence.


State and Federal laws have a great impact on terminations, and they must be handled with expertise. If an incident occurs that you believe could be cause for immediate termination, contact your legal counsel. If the behavior is a repeated offense, the employee's file must be sufficiently documented to support the termination. Before you discharge an employee, review all documentation with your legal counsel.


All incidents of misbehavior, conversations with employees regarding those incidents, memoranda, employee responses, and other information pertinent to the misbehavior or performance problems must be documented in the personnel file.

When you document violations or performance problems, be objective and give only the facts. Do not include your personal feelings or opinions about the employee or the incident in either the memorandum or your verbal warnings.