What Is an Employment Termination Letter?
An employment termination letter is a notice from an employer to an employee that the employee is being fired or laid off. It explains the reasons for ending the relationship and the effective date. It also lists any final steps, like the return of company property.
This formal document proves a business acted fairly in ending a working relationship. It finalizes a termination and shows that an employee received a chance to improve, if applicable.
Our employment termination letter template helps you relay the news respectfully. Even if it’s tough, the form uses simple and professional language to make it easier.
Terminating Senior Personnel
A termination letter presents an opportunity to remind senior employees of any non-disclosure or non-compete agreements they may have signed.
Why Is a Job Termination Letter Important?
A job termination letter gets the end of a job on file. It communicates that a company will no longer employ an employee and helps the employee know what to expect. They’ll get guidance on remaining benefits, including health insurance benefits and payouts for unused time off. They’ll also understand the reason for their termination if you provide one.
Incorporate job termination letters into your HR practices to standardize terminations. This creates fairness, a more seamless transition, and a better reputation for your business. Plus, you can ensure compliance with company termination procedures and protect against legal challenges.
When to Use a Termination of Employment Letter
You may need to terminate an employee if the company is downsizing and no longer needs the employee’s position. If you want to reduce company costs but not fire an individual permanently, consider writing a furlough letter.
Here are some employee-initiated reasons you’d need to end an employment relationship and issue a termination letter:
- Being habitually late or absent
- Failing to meet performance goals
- Engaging in poor conduct
- Damaging company property
- Violating company policies
- Misusing company resources
- Falsifying company records
Do I Need a Reason to Fire an Employee?
Almost all US states are at-will employment states, meaning employers can fire employees without a reason. Montana is the exception, as employers must have good cause to fire employees.
In at-will employment states, federal and state laws prevent employers from firing employees for discriminatory reasons. For example, Title VII of the Civil Rights Act of 1964 prevents employers from firing employees based on discrimination based on national origin, sex, religion, color, and race.
What to Include in an Employment Termination Letter
An effective end of employment letter contains all the information an employee needs to know what’s happening:
- Dates: Date of letter delivery and effective date.
- Employer details: Company name and the name of the person filling out the form.
- Employee’s information: Employee’s full name and address.
- Reason: Reason the employee is being fired or laid off.
- Corrective actions: Ways you’ve attempted to address the issue before.
- Returning company property: A request to return company property.
- Payment notice: Notice of the payment they’ll receive, including final paycheck and severance details.
- Contact information: A phone number for the terminated employee to call if they have questions about health benefits or retirement plans.
- Repeal options: Steps the employee can take if they want to appeal the decision.
- NDA reminder: A reminder of an NDA they’ve signed, if applicable.
How to Write a Letter of Termination of Employment
Here’s how to write a letter of termination of employment so you can deliver the news clearly.
1. Understand Your Company’s Termination Process
Before you fire an employee, review your company’s termination process. Ensure the reasons for firing someone correspond to company policies and confirm they aren’t discriminatory. Discuss the decision with the appropriate personnel, whether legal counsel or the human resources department.
2. Structure the Employee Termination Letter
Begin by writing the letterhead. Include the date you’re writing the letter and the name and address of the employer.
Address the employee by their full name. Use a formal salutation like “Dear.” For clarification, add their job title and employee ID number.
3. List the Termination Details
List the date the termination will take effect, as it may be different from the date you write the letter. Include the reasons or events that led to an individual’s dismissal. If there’s a previous written warning, state it in the letter. Ensure you account for any relevant evidence that supports the dismissal to avoid confusion and legal issues.
While you can choose not to include a reason if you and the employee have an at-will employment contract, you should still consider including a reason to be respectful of the employee’s time at the company.
4. Request the Return of Company Property
Highlight any company property the employee must return. This may include a company cell phone, car, laptop, badge, or keys.
5. Include Employee Benefits Owed
Always clarify the compensation and other benefits an employee will receive during dismissal. A termination of employment letter can include details regarding one’s final pay, severance pay, 401(k), unused leave days, and health benefits.
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. This way, they won’t share company information with competitors or the general public.
7. Provide a Dispute Method
An employee may want to appeal the decision if they think the termination is wrongful. For example, they may claim that you’ve confused their actions with someone else’s. Or, they may claim you lack employee evaluations showing issues with their work. Give employees steps to follow if they want to appeal their termination.
8. Offer the Opportunity for an Exit Interview
Provide the employee with an opportunity to participate in an exit interview. This interview can let the employee share their thoughts on how the company can improve in the future. Encourage this opportunity, but make it clear that it’s optional.
9. Finalize & Sign the Letter
Review the letter and confirm all details are correct. Add a brief statement about being willing to write a recommendation letter if this is true. Close the letter with your signature right after the word “Sincerely.”
10. Schedule a Meeting
Schedule an in-person meeting with the employee to deliver the news. Choose a time and day that makes sense for your company’s goals, as you may prefer to deliver the news at the end of a week versus at the beginning of a week. Inform them of their termination verbally and provide them with the letter to keep for their records.
Keep the meeting short to respect the employee’s time, but be mindful that the news may affect them emotionally. Be empathetic and offer them resources if possible. Stay calm and allow them to express their feelings openly.
Employment Termination Letter Example
Here’s an example of an employment contract termination letter:
RE: OFFICIAL NOTICE OF EMPLOYMENT TERMINATION
Dear Phoebe Maskin,
This letter is to inform you that as of October 31, 2023, you will no longer be employed with Raven Industries. You have been terminated because of your poor attendance at work. Our records show that you’ve received three written warnings and had two conversations with your manager in an attempt to rectify the attendance issues.
We ask you to kindly return the following company property before October 31, 2023: your company-issued laptop and cellphone.
You are entitled to payment up until October 31, 2023.
For any matter regarding health care benefits, health insurance, 401k and/or pension, please contact Katie Standhaft in the human resources department.
Your final paycheck will be in the amount of $1,500, which will be delivered to you via direct deposit.
If you choose to appeal this decision, you may contact Julien Chase in the human resources department.
You can choose to participate in an exit interview. If you wish to do so, the interview will be conducted at a place and date suitable to all parties.
Sincerely,
Lucy Duncan
HR Manager
Employment Termination Letter Sample
View a free sample termination letter for employment so you know how to word your message. When you’re ready, fill it out and download it in PDF or Word format.
How Legal Templates Helps with Employee Terminations
Legal Templates provides an easy-to-use employment termination letter template that helps you handle a tough task with clarity and professionalism. The template walks you through what to say, keeps your message respectful, and ensures you include all the important details. You can also save the letter for your records to stay organized and meet company or legal requirements.
Frequently Asked Questions
Are employers required to provide a termination letter?
There’s no federal law requiring the provision of an employee termination letter, but some states have specific requirements for communicating job termination. Even in areas without requirements, it’s courteous to provide this written message to employees. Plus, it helps record the termination process.
Can an employer withdraw a termination letter?
An employer can withdraw a termination letter if they made an error in terminating an employee. In this case, an employee will have the option but not the duty to accept their job back.
Does a termination letter need to be signed by both the employee and the employer?
There isn’t always a legal requirement for the employer to sign the termination letter, but it’s good practice. The employer’s signature lets them confirm the termination and document its reasons. The employee should also sign, especially if confirming the details of a severance package.
What is the minimum notice period for termination of employment?
Unless the employee is under contract or covered by a union agreement, you’re 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.
