A termination letter is an official notice informing an employee that he/she is being dismissed from their current occupation. The letter provides details of the reasons for the involuntary dismissal, outlines what steps the employee will take, and explains any benefits or compensation the employee will get. Termination letters are also known as a “letter of separation,” a “notice of termination of employment,” or “contract termination letter.”
As an employer or Human Resource Manager, you will find yourself in situations where you want to write a termination letter for your employee. A termination letter contains details of the dismissal and serves as a confirmation of the firing to the specific employee. It is important for you as a manager to retain a copy of the termination letter in the employee’s file for records in case of future judicial disputes.
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How to Write a Termination Letter
The following is a guiding step by step approach that you may use to write a proper termination letter:
Notify The Employee Of Their Termination Date
This should be your very first step. Keep the employee aware that their employment will be dismissed and specify the effective date of the dismissal. By doing this, you avoid any potential misunderstandings or confusion, and you allow the employee to start preparing for their dismissal.
State The Reason (S) For Termination
Immediately you have notified the employee of their termination, provide detailed reasoning. Ensure that your explanation is clear, accurate, and concise to avoid misinterpretations or confusion. Consider including evidence to support your reasons. An employer’s reasons for terminating an employee can vary from gross misconduct, insubordination, downsizing, corporate closures, or tardiness.
Mention Compensations (If Any)
Provide a detailed explanation of how the employee’s compensation and benefits will be impacted once their employment is terminated. Compensations and benefits may include; severance pay, salary owed, payment of unused leave days e.t.c. Also, inform them what will happen to their retirement, life insurance, or healthcare funds if applicable.
Notify Them About The Return Of Company Property
In this section, notify the employee of your company property return policy. Tell them to return any company property in their possession. This could be a company ID badge, parking pass, or company cell phone, among others.
Reminder For Any Signed Agreement
During the hiring process, most employees are required to sign some form of non-disclosure agreements or other employment-related documents. Remember to inform employees of these agreements and include copies for their review and record.
Add HR Contact Details
Right before signing off the termination letter, provide the contact details of the employee’s respective HR representative to seek clarifications regarding their compensation, benefits, or any other details mentioned in the termination letter.
Importance of Employment Termination Letter
Even though the Fair Labor Standards Act has no specific guidelines stating an employer must provide a letter of termination, or notify a given employee of their termination ahead of time, except when the employee belongs to a union or collective bargaining, a termination letter is very important.
They are important in the following ways:
- It is valuable because it helps maintain a good reputation for your company, helps you provide a record of events for legal reasons, and allows you to show professionalism.
- Issuing a letter of termination is a more empathetic and respectful way to dismiss employees. Proving employees with a notice allows them some time to think through and handle external factors that will change with their loss of jobs. It also provides the employees with the reasons for and details of their dismissal; thus, they will understand better. As a manager, it is important to continue showing respect to the employee and assist them in adopting this transition to foster a good relationship between the company and the employee.
- Having a document of termination provides proof of the dismissal and receipt of company property and gives a specific detail of the effective date of termination, which may come in handy in a possible legal dispute. As an employer, all you need to ensure is that the termination is non-discriminatory, and no contract or union agreement is in place before issuing a termination notice.
Reasons to use Employment Termination Letters
Employment termination letters are usually used to inform someone that their employment is coming to an end. They are primarily considered a courtesy to the employee, but they can sometimes be required by an organization’s internal Human Resource policies. Various circumstances may prompt an employer to use a termination letter.
These circumstances include the following:
Without cause
This refers to employment dismissals related to organization downsizing and wider market factors, unrelated to specific employee performance or productivity within the company.
With cause
This refers to dismissal due to the employee’s job performance and behavior. It is directly related to the employee’s job productivity.
End Of A Business Contract
This letter is used to terminate an individual’s employment due to the end of a contract or to end business relations with another person that you entered a contract in the past.
Download Employment Termination Letter Templates
Are you an employer or HR professional who is faced with the difficult task of letting someone go? Download our free employment termination letter templates to help you. Our templates provide structure to your own letter and capture important elements that help you to avoid misunderstandings and possible disputes. In addition to that, our templates can be quickly tailored to meet your needs. Download our free premium templates today for better assistance now or in the future.
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Tips to Keep in Mind Before Writing a Termination Letter
Before writing or issuing a termination letter, consider the following tips to make your letter as effective as possible:
- Be concise and stay on the topic- leave out unnecessary details that are unrelated to the employee’s dismissal
- Keep the letter very respectful and professional
- Use an official business letter format
- Show some genuine concern instead of showing no emotion at all.
- Seek council from your HR department or legal department
- Be cautious and honest- do not include inaccurate or exaggerated information.
- Do proper research before beginning the termination process, as a letter is only part of the firing process.
Frequently Asked Questions
The majority of employers and workers are “At-Will Employment.” This means that the employer-employee relationship can end at any time for any reason (or no reason) provided that the employee is not being laid off for discriminatory reasons or is not covered by an employment contract. No given law necessitates employers to provide termination notices, but most of them still provide one.
A termination letter should include the employee’s basic information, such as their name and occupation, the name of their supervisor or manager, the name of their respective human resource representative, and the person in charge of the firing process. Include the reasons for termination, any severance benefits, and compensation that the person is entitled to going forward.
No. signing or not signing the termination letter does not affect the firing process in any way. The decision of the employer to fire you is final.
Employers are not required by law to notice an employee before layoff unless the employee is covered by a union agreement or under a contract. In this case, the employee-employer relationship is regulated by the terms of the contract.
However, under the Worker Adjustment and Retraining Notification Act (WARN), employers with 100 or more employees must provide a 60 days’ notice if they are doing mass layoffs or plant closure.
State laws vary depending on your location, therefore check with your Department of Labor to obtain more information about your local rules and regulations.
You can schedule a sit in meeting with the employee and discuss the termination with them, but the best approach would be to have a written notification.
This is usually a requirement for most big companies and corporations. They outline basic information about the termination, e.g., employee name, department, position, and termination date.
1. If it is required by your local/state law
2. If you want to have documentation of the termination in case of a lawsuit
3.If you need to pass information about owed compensation and benefits
4. When you want to make the termination clear to an employee
5. When you feel or believe that the employee is ineligible for unemployment.
