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Termination Letter: Writing Tips + Template
Terminating an employee, or writing a termination letter, can be a difficult task. But, sometimes it is necessary for the health of your business. In this article, we outline when to use a termination letter, the kinds that exist and how to effectively write one.
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What Is A Termination Letter?
A termination letter is a “letter” that the employer gives to an employee when they need to terminate their employment. It doesn't have to be a “letter” per se, it can be an email that the employer sends to the employee.
The purpose of the termination letter is for the employer to let the employee know that they no longer work in the stated company from the designated date.
Types of Termination Letters
There are four basic types of termination letters:
With voluntary termination, it’s the employee who initiates to process of leaving the company. The employee can do voluntary termination for various personal and/or professional reasons such as problematic (toxic) work environments, lack of development opportunities or personal problems such as health or well-being.
Involuntary termination happens when the employer initiates the process of terminating the employee from the company. The reasons can be multiple and the most common ones are the following:
Employee’s (negative) behaviour in the workplace
Violating company rules and policies
Termination because of downsizing
Employment at Will
With employment at will, the employer has the option to terminate the employee at any time and place without giving out any reason. They don’t need to give the reason to the employee, but they need to have an internal document where they state the reason for terminating the employee so that they can eliminate any case of discrimination should it arise.
Termination of Mutual Interest
Termination of mutual interest happens when both sides agree that they no longer want to work together. Again, this can happen for a plethora of reasons from both sides. Usually, this kind of termination is a lot less painful since it’s agreed upon by both the employee and the employer.
How To Write A Termination Letter
When writing a termination letter, you should make sure that it has all the necessary elements to it. The basic ones should be:
The date of termination. The employee needs to know when the termination will take place.
The detailed reason for termination. Even though you’re not legally obliged to give termination details to your employee, you should state the reasons so that you protect yourself from any possible lawsuits (discrimination charges). You should state the reason for termination in detail for your employee so that they know what the reasoning behind your decision was.
Compensation and benefits. You need to state what will happen with their ongoing benefits and compensation— that means when they will get their final pay cheque and what will happen with their benefits such as unused annual leave.
Returning company property. You need to inform your employee that they need to return company property such as phones, laptops, or any other property they might have in their possession.
Termination Letter: Length, Format and Font
A termination letter shouldn’t be too short nor too lengthy. You need to address all the major points of why the employee is being terminated— nothing more, nothing less.
The length of the letter should be less than one page and for easier reading, you should bold the most important information on the letter (such as the date of termination and the reason for it).
When writing the termination letter, make sure that you double-check the letter before sending it so it doesn’t have any errors to it (especially the sensitive information and the date of termination).
Termination Letter Example
When terminating an employee, you can use the following template:
TITLE OF THE EMAIL: Letter of termination
SUBJECT LINE: Unfortunately, we have to cease our cooperation
______ (insert first name), we regret to inform you that we must terminate your employment at ______________ (position) in the _______________ (company name).
The termination stands effective from ____________-(date of termination).
The reason for termination was______________________ (reason for termination). _________________________________________________________(explain the reason in detail).
Payment for your _________________________ (salary, benefits, annual leave) will be included in the final pay cheque that you will receive on ____________ (date when they will receive their final pay cheque).
Please return the ______________ (name company property) by___________________ (insert date).
If you have any questions, please contact______________________ (insert HR contact name).
________________ (Name), _____________________ (title in the company)
Best Practices For Writing Termination Letters
Here are a couple of best practices when it comes to writing termination letters:
Ask the terminated employee to return company property before they receive their final pay cheque to avoid delays
Consult yourself with a lawyer if you’re not sure what goes in (and doesn’t go in) a termination letter
Avoid sarcasm and jokes in the termination letter and keep it professional
Remind the employee about any legal agreements that you still have with them such as non-disclosure agreements or non-compete clauses.
Frequently asked questions
Here are the four most frequently asked questions when it comes to termination letters:
What should an employee termination letter include?
The termination letter should include:
The date of termination.
The detailed reason for termination.
Compensation and benefits.
Returning company property.
Why is a termination letter important?
A termination letter informs the employee that they’re no longer working for a company. The company protects itself from legal action (discrimination cases) by using a termination letter.
What are potential reasons for termination?
There are multiple reasons for termination such as misconduct, poor performance, employee’s (negative) behaviour in the workplace and violating company rules and policies.
When should you not use a termination letter?
There are almost no situations where you shouldn’t use a letter of termination.
Dismissing an employee is sometimes necessary
Terminating an employee is sometimes necessary and if you need more information on how to do that face-to-face, you should read our Dismissing An Employee: How To Have That Conversation on our blog section.
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