Management of any business involves staffing, which is the practice of hiring and firing staff/employees. Firing is just as crucial to the growth of a business as is hiring. Laying off employees helps in certain aspects of a company, such as creating vacancies to accommodate new staff members with novel ideas in terms of creativity and innovation, consolidating businesses, and helping a business adapt to the level of technology available. Therefore, as an employer at one point or the other you will be required to notify an employee of their termination for one reason or the other and this is done through a termination letter.
What is Employee Termination
Termination in the employment sector is firing an employee from a given firm, Company, or business. Termination absolves an employee from their responsibilities to the Company and any duties allocated to them within the same organization. In the same regard, it releases an employer from obligations such as a continuation of salary payment to an employee.
What is an Employee Termination Letter?
A termination letter is a formal and official detailed written notification by an employer to an employee informing the latter of the termination of their employment at a business/company for a given reason. A termination letter is often used when the termination is involuntary. Through a termination letter, the author/employer declares their intention to end the employee’s employment at the company and highlights the reason(s) why he or she arrived at this decision. It is through a termination letter that an employer puts their promise to pay or compensate the employee, where necessary or mandatory, into writing. It is also referred to as a letter of dismissal or a notice of termination.
Importance of this Letter
Documentation is an essential aspect of running any business as it helps show when events such as meetings, attendances, hiring and firing of employees, contract agreements, purchases and many more happen. A termination letter is an example of such a document when firing an employee. Despite the fact that it is not a legal requirement to issue a termination letter, a termination letter can prevent a situation where an employee claim they were terminated without their knowledge or without cause. It is also seen as a show of courtesy. A termination letter is also important for record keeping in a company. As an employer you can use the letter to request the employee to return company property they might be in possession of.
As an employer having a copy of the letter is of grave importance. Upon firing, employees could feel that they were wrongfully laid off and may choose to challenge the decision in a court of law. A termination letter can be referred to in this case to highlight your concerns as an employer. It clearly states what, how, and when an employee failed to fulfil their duties, if that’s the case, and shows the reason for firing the mentioned plaintiff, aiding the court to determine if the said reason is justified.
Types of Employment Termination Letter
A termination letter is a document used when an employer and an employee have to part ways due to unavoidable circumstances such as misconduct, economic constraints, dissolution of a company and other reasons. These factors can lead to the termination of an employee under the following categories.
Termination letter without cause
It is important to note that termination without cause is different from wrongful termination. To distinguish the two, one would have to define each of the two. Wrongful termination is when an employee is dismissed without being given proper notice of termination. It can also occur when an employer makes adjustments such as wages to the employment contract without consulting the employee and proceeding to provide the employee with the request to accept the changes or quit. Termination without cause, on the other hand, is where an employer decides, from their better judgment and not because the employee has necessarily done something wrong, to let go of the employee. These could be financial constraints or unprecedented events such as the COVID 19 pandemic, for example. Where you terminated an employee without cause, a notice to the employee is required. It is important to note that specific laws protect different individuals from termination depending on individual traits such as gender, disability, age, national origin, and race. Hence it is vital to ensure that none of these traits influences the decision to terminate employment without cause. An example of such a letter is included.
Employment termination letter sample (without cause)
December 10, 2020
Chief Security Officer Bico Retailers,
New Portland, CA 7711,
Dear Mr. Allison,
We are saddened to let you know that due to our migration to online platforms, we will be closing our retail shops, and consequently, we are to terminate your employment with us as of December 20.
You are entitled to this month’s full salary payment and medical care benefits for the next two months. We will include a send-off package in your final paycheck, which will be available for you to collect in three weeks.
You are required to hand in your membership card, company vehicle, and other security detail equipment as handed to during the hiring.
You are reminded that company security protocols are confidential and should remain according to your employment contract.
In the event you have pending questions, you are to contact HR through 02271555 or [email protected]
We thank you for your devoted time with us and wish you all the best in the future.
Human Resource Manager,
Termination Letter With Cause
Termination with cause occurs when an employee’s actions in the workplace; their interaction with coworkers, manager, or customers is unacceptable, forcing the employer’s hand to terminate their contract of employment. The identified cause is given and stated in the letter of termination. Some of the reasons include breach of contract, disregard of company policy, theft of company property, extreme insubordination, a conviction for other crimes, violation of a company’s ethics, violence, and falsifying information when applying for a job, among others.
Here is an example that you can use:
Employment termination letter sample (with cause)
Termination with cause occurs when an employee’s actions in the workplace; their interaction with coworkers, manager, or customers is unacceptable, forcing the employer’s hand to terminate their contract of employment. The identified cause is given and stated in the letter of termination. Some of the reasons include breach of contract, disregard of company policy, theft of company property, extreme insubordination, a conviction for other crimes, violation of a company’s ethics, violence, and falsifying information when applying for a job, among others. Here is an example that you can use:
Sample letter of termination with cause
January 26, 2021,
5205 Birmingham Street,
Dear Mr. Dowel,
We are hereby informing you of the permanent dismissal, effective immediately, from your duties at Highland construction Works Company due to the following shortcomings as a site supervisor;
i.) Failure to account for company inventory totalling 2200 dollars in March, June, and November.
ii.) Frequent absence from the site as highlighted in the meeting held on January 5.
iii.) Lack of honesty and accountability in your given duties.
You are to return all personal protective gear and the vehicle given to you by the Company.
We will pay your wages for this month in full on the condition the company vehicle is in good condition; otherwise, deductions will be made as agreed on submission.
You are asked to confirm receipt of this letter via email or a copy of this letter signed.
We, therefore, wish you the best of luck going into the future.
Eng. J. Atkinson,
Common Reasons to Terminate the Employment Contract
A contract can only be terminated by the signatory parties involved in developing the agreement. Since a contract requires the parties involved to meet certain obligations, termination may occur if these are not met, or one party is not satisfied.
The various instances which can lead to termination include;
Breach of contract
This happens when a party intentionally fails to honour their obligations as agreed upon in the contract. For example, when a supplier agreed to deliver goods purchased at a specific date and two weeks later, they still have not fulfilled that promise, which constitutes a breach of contract. You are well within your rights to terminate the agreement and seek a different supplier. You can do this through a letter of termination.
Impossibility of performance
This occurs a party is no longer capable of carrying out the said duties in the agreement. A case in point is when footballers suffer irreversible injuries while undertaking non-football-related activities and can no longer play for the team, therefore, becoming more of a liability. The team management can, therefore terminate their contract through a termination letter stating their reasons.
Rescission of contract
A rescission occurs when one party misrepresented something, is not old enough to decide whether to enter into a contract or cannot make legal decisions leading to contract termination. You can use a letter of termination in such a situation to address the reasons for termination.
Termination by agreement
The parties involved can both decide to render the contract void due to a specified reason. You can agree on a basis upon which you will terminate the contract. Here you can issue a written letter of termination to the other party to notify them of the end of your agreement.
Completion of contract
Once the obligations of a contract are fulfilled as stipulated in a contract, and both parties are satisfied, both parties need to acquire a letter of contract termination showing that the agreed conditions were met. The following is a sample of such a letter.
Components of an Employment Termination Letter
A termination letter can be segmented into several parts, which must be included when writing. They include the employer, employee, reason for termination, benefits and compensation packages, legal implications, and payment forms to be made after the termination letter is issued.There are various formats that one may decide to use when writing a termination letter however, you should follow one formally acceptable standard format. The standard format ensure that all the relevant information is included in the letter.
Header – employee information
Important employee information such as their name appears in their identification card or contract of employment, their ID number, department, and position they held in the institution. This information declares the exact person to whom the letter is addressed.
Details of the termination (dates and reasons)
Secondly, you should include the dates and time, where necessary, to show when the said events of either misconduct, the onset of economic problems, and from which Date the termination is set to be effective. Dates help illustrate a chronological occurrence of events up to the end of obligations between you as the employer and the employee, which may be up to the last day an employee is entitled to their benefits privileges.You should also include the reasons for termination.
Receipt of company property
The next item should be the list of company property the employee is expected to hand in. this could include key cards, company vehicles, laptops and such.
Benefits, severance and other compensation details
In this section the employer highlights the process of payment of wages for inconveniences, pending wages, benefits, compensation packages and such aspects of the employment contract.
An employee should be reminded of their legal obligations as agreed in their employment contract, which helps protect resources such as the companies’ intellectual property.
Details about the final paycheck
Lastly, inform the employee of how they are to receive payment for any working period they were not paid. Make sure to include the options available for payment and the Date they should expect their dues. This prevents future lawsuits, which would be costly and damaging to the Company’s reputation.
Closing and signatures
At the end of the letter, show appreciation of the employee for the time they worked for the Company before signing off. Finally, you can make you make your final remarks while providing the person or office the recipient should contact should they have any pending questions. You can then sign off.
Items You Can Exclude from a Termination Letter
The following are some of the items you should consider leaving out in the termination letter;
Severance to waive legal claims
In simpler terms, this is offering some payment to the employee as an incentive for them to relinquish any legal claims. This creates doubt if at all, there were justified grounds for any termination in the employee’s mind. In this case, the severance package negotiation is always recommended after the issuance of the termination letter.
They include age, disability, race, sex, religion, marriage and civil partnership, pregnancy, and maternity. They represent a category of traits from which a person can be discriminated. It is your legal obligation to not use either as a basis to offer employment or in termination of the same.
Language can be of different types; casual/slogan, factual, formal, or thoughtful. It would be best if you kept the language in the letter as objective and formal. Familiar language is one that the reader regularly uses; hence it is easily recognizable and understandable. An example of such a phrase is; you are better off with the free time. Familiar language tends to dilute the seriousness of the situation.
All the evidence or reasons for firing
When listing your reasons for terminating the employee, it is advisable to stick to the primary concerns. Where minor concerns are included, an employee can decide to oppose these in a court of law, consequently compromising all the other concerns.
Employment Termination Letter Template
Employee’s full name with a courtesy title]
[Street address or PO Box]
[City], [State] [Zip code]
Dear [Mr/Mrs/etc.] [Last name]:
Your employment with [ABC Company] is terminated effective [state [‘immediately’] or insert effective date of termination].
The reason(s) for terminating your employment with us [state reasons for the termination, such as misconduct or end of a contract or that the Company is downsizing. Be objective and fact-based.]
You are required to hand in [state the company property in the employee’s possession] before we can process your final paycheck. The check will be issued on [insert date] and will include all wages earned [include any additional pay owed to the employee]. Kindly contact [insert name] in the HR department through [insert phone number] or [email address] to discuss your benefits [health care or any other].
I would kindly like to remind you that you signed [list any agreements reached before or during their employment], which you are bound even going forward.
Thank you for your service to [ABC Company].
Termination Letter Sample Letters
Termination due to layoffs/ downsizing sample
January 15, 20xx
Manager Durban Office,
New Portland, CA 3411,
Dear Mr. Ford,
It is with our utmost apologies to inform you that due to the reduced flights in and out of Durban due to the coronavirus pandemic, we are forced to close various offices around the world, which would mean the termination of employees within the respective posts. This will be effective as of the 20th of this month.
You will still be eligible for your health care benefits and salary for the next month. We will include a send-off package in your final paycheck, which will be available for our collection by February 5, 2021.
You are required to return your Royal Palms Tours membership card before collecting your paycheck. For any further clarification or inquiries, contact HR Ms. Gabrielle Hall through 01155593 or [email protected]
We appreciate your input towards the Company’s growth and wish you the best in the future.
Mr. Harrison Saji.
Senior V.P Royal Palms Tours
End of business contract termination letter sample
1629 Northern Lane
New York, NY 4471
January 19, 2021
Sanford Metal Works Suppliers
1773 Valley Lane,
New York, NY 4471
RE: 11AS3447 ORDER
We would like to inform you with deep regret that we are canceling the metal beams order, serial number 11AS3447, made on December 5, 2020, and delivery promised to be before January 5, 2021. This has led to severe delays in our construction as well as losses in revenue.
We will not pursue any reimbursement for now; however, we would ask that You made the down payment made be returned as there were no deliveries.
Kindly confirm receipt of this letter, email being preferable.
Letting an employee know they are fired can be an overwhelming task, but it is inevitable more times than not. It is also important that you keep a record of all your employee status. To do this effectively, you will have to craft a great termination letter- which may be hard, particularly if it is your first time doing so. To help you get the right words and the proper format to use, download and use our simple, easy to use employee termination letter templates to help you out.
Situations Related to The Termination Process
The termination process needs a holistic approach as it cuts across different agreements, laws, and policies. It is, therefore, critical to put all these into consideration in mind when terminating an employee. Some of these considerations include; possible retaliation allegations, collective bargaining agreements(unions), advance notice duration before action, protection of confidential information, final compensation or any other, unemployment benefits, potential competition, and signing of releases.
An employer should strive to avoid liability and potential legal implications when terminating employees. This is especially when dealing with protected employees entitled to certain privileges and rights, specifically in instances where termination was without cause.
Always keep the tone as formal as a termination letter is a legal document and lets the employee understand the situation from a professional standpoint.
Frequently Asked Questions
It is essential to do so in person as it helps portray a sense of care for the employees, but sometimes that might not be possible due to some unavoidable reasons. Whether it is done in person or not, you are recommended to issue a letter of termination.
You should use a formal tone that shows firmness and sensitivity as a loss of employment, which is detrimental to one’s life.
It is not legally mandatory as it depends on a region’s policies; however, it is a valid document when presented before a court of law.
An employee is not obligated to sign; however, they can show they received the letter. In the employer’s interest, the employee signs as this dissolve any future legal claims by the employee.
The notice period varies from country, region, and state; however, the general guideline is no less than one week.
As a company/employer, a termination letter is recommended to declare the company/employer’s official position regarding an employee(s) employment status. It is equally important to involve an attorney throughout the firing process as any misstep can potentially lead to legal actions against a company. Correct for spelling and grammar before issuing the letter to avoid misinterpretation if the letter proves to be useful in court in the future. Remember to download our templates as applicable, as sources of reference, from our site.