An Employment Termination Letter is used when you want to give formal notice to an employee that they are being fired or laid off. Termination of employment is a necessary part of any business, and the responsibility falls on the employer.
Our free Employment Termination Letter can help you simplify this process. We will guide you on everything you need to consider when writing a termination letter, eliminating any risks of disputes and misunderstandings.
What is an Employment Termination Letter?
An Employment Termination Letter is a document from an employer to an employee that informs the latter that their job is ending.
This formal notice must be clear and concise, letting the employee discover why they are being dismissed from their role.
Why Are Termination Letters Important?
Letters of termination provide a written record of an employee’s termination, outlining the reasons for the termination and other important information, such as any severance pay.
Employee termination letters are important as they prove that your business acted fairly and legally in terminating an employee.
They finalize a termination and usually show that an employee was allowed to turn the termination around (in the case of poor performance or misconduct).
A termination letter is also one of the final documents the employee will receive so they can detail company policies around termination and outline what happens next.
When terminating executive and senior employees, an employee termination letter also presents an opportunity to remind the employee of any non-disclosure or non-compete agreements they may have signed.
Common Types of Termination Letters
Employment termination letters are used for a variety of reasons. A few scenarios where you will use one include:
- Due to layoffs/downsizing: If a company needs to cut its workforce, typically due to struggling to overcome financial instability that could affect the long-term viability of the business, then an employment termination letter can notify employees that their employment is being terminated.
- For cause (misconduct, poor performance, lack of attendance, etc.): If an employee isn’t meeting the terms and conditions of their employment contract, such as the hours of work, job responsibilities, or the company’s code of conduct, then an employment termination letter can be used to inform them of their contract termination.
- Termination of a business contract: If you’re working with a business or partner and need to terminate the agreement, you could use an employment termination contract(depending on the relationship), but a notice of contract termination may be more appropriate.
How to Write a Termination of Employment Letter?
Firing an employee is a difficult thing for most employers. It’s a delicate process that must be handled carefully so employees don’t feel degraded. The tone of your letter of termination of employment should be formal and firm.
Here’s how to write an employee termination letter:
1. Add Employee Information
The letter should include the employee’s full name, job title, employee ID, address, and the name of the contact person in charge of termination.
2. Inform Them About the Termination Date
The date when a termination is drafted and when it takes effect will help avoid confusion when firing an employee. Notifying an employee about the termination date makes the handover process easier.
3. Explain Why They Are Being Dismissed
It’s advisable to include the reasons or events that led to an employee’s dismissal. If there are previous verbal or written warnings, you should incorporate them in the Employment Termination Letter.
Make sure you take into account any relevant evidence that supports the dismissal to avoid confusion.
4. Include Any Benefits Owed to Them
Always clarify the compensation and benefits an employee will receive during dismissal. A termination of employment letter template can include details regarding one’s final paycheck, severance pay, 401(k), unused leave days, and health benefits.
5. Return of Company Property
Highlight any company property the employee is expected to return to their line manager or the HR department, such as a laptop, company car, badge, keys, or phone.
6. Spotlight All Legal Agreements
Reminding employees about all documents they signed during onboarding or their employment is critical, such as non-disclosure and non-compete agreements.
7. Add a Signature Section
The person in charge of the termination — the employer or HR rep — should sign the termination letter right after the word “Sincerely.”
Alternatively, you can simplify this process using our contract termination letter builder.
Other Things to Consider in an Employment Termination Letter
- Don’t indulge in unrelated issues
- Watch out for any crucial omissions
- Consider using the company letterhead
- Don’t forget about the minimum notice period
- Be professional, courteous, honest, and unbiased
Employment Termination Letter Sample
Here’s a sample of our termination letter to employees that you can use. You can also download 0ur blank template in PDF or Word, print it, and fill in the required fields.
Below, you can see an example of an employment termination letter. In this scenario, a termination letter is used because of company budget reductions.
When Are Employment Termination Letters Used?
The main objective of an Employment Termination Letter is to notify an employee that they’ve been fired. Organizations also use termination letters as part of HR’s standard operating procedures, signifying the end of employment contracts.
These letters end fixed-term business contracts or engagements when a clear conflict of interest occurs.
Organizations can use termination letters with or without cause.
Suppose an employee violates a company’s code of conduct by stealing company property, harassing employees, or absconding from duty.
In that case, such actions may warrant an immediate termination letter to the offending employee.
A contract termination letter template can also be used for business reasons like downsizing staff.
Frequently Asked Questions
How do I inform an employee about termination?
You can use an employee termination letter to inform an employee about termination.
It’s appropriate to give the employee their termination letter during a face-to-face meeting, as this allows you to document the meeting and carry out the process in a way that promotes professionalism and sensitivity.
What are the five fair reasons for dismissal?
Five fair reasons for dismissal of an employee include:
- Issues with performance or capability
- Breach of a statutory restriction
- Some Other Substantial Reason (SOSR)
Does an employee need to sign a termination letter?
No, an employee must not sign an employee termination letter.
A termination letter informs the employee that their job is ending and does not require signing by the employee.
What is the minimum notice period for termination of employment?
Unless the employee is under contract or covered by a union agreement, you are not required to give notice to an employee before termination of employment.
However, under the Worker Adjustment and Retraining Notification Act (WARN), employers with 100 or more employees must provide at least 60 calendar days advance written notice of a plant closing and mass layoff affecting 50 or more employees at a single site of employment.