What Is a Letter of Termination?
A letter of termination is an official document informing an employee of their dismissal. Such a letter provides clarity and helps departing employees understand internal HR policies for a smoother transition.
Is There a Requirement for a Letter of Termination?
In general, the Federal Labor Standards Act (FLSA) does not require organizations to issue a letter of termination. However, exceptions exist where employees are part of a union, a collective bargaining agreement, or under certain circumstances of mass layoffs or corporate closure. Most employees are “at-will,” meaning either the employee or employer can end the employment relationship.
Writing a Letter of Termination
A letter of termination needs to reflect the circumstances of the dismissal, and employers typically terminate employees in three situations:
Poor performance: If an employee’s performance is not meeting expectations, it’s important to document the specific performance issues that led to the termination. The letter should clearly state the reasons for the termination, the steps taken to address the performance issues, and the employee’s right to appeal the decision.
Misconduct: If an employee has engaged in misconduct, such as violating company policies or engaging in unethical behavior, it’s important to document the specific actions that led to the termination. The letter should clearly state the reasons for the termination, the specific policy or ethical code that was violated, and the employee’s right to appeal the decision.
Redundancy: If an employee’s job is being made redundant, it’s important to clearly state the reasons for the termination in the letter. The letter should explain why the employee’s position is no longer required, what the company is doing to support the employee through the transition, and the employee’s right to any severance or other entitlements.
Elements to Include in a Letter of Termination
A letter of termination should contain the following:
- Introduction: Start the letter with a clear statement that the purpose of the letter is to terminate the employment of the employee. Include the employee’s name, the name of the company, and the date.
- Reasons for Termination: Clearly state the reasons why the employee is being terminated. Be specific and concise. Depending on the reason for termination, you may want to provide evidence, such as documentation of poor performance, policy violations, or ethical misconduct.
- Date of Termination: Include the date that the employee’s employment will be terminated. This can be the last day of the notice period or immediately, depending on the circumstances.
- Explanation of Next Steps: Explain what will happen next, such as when the employee’s final paycheck will be issued, when benefits will end, and any other relevant information.
- Information about Benefits and Entitlements: Provide information about any benefits or entitlements the employee is entitled to, such as severance pay, unused vacation pay, or health benefits. Explain how the employee can access these benefits and entitlements.
- Information about Return of Company Property: If the employee has any company property, such as a laptop or phone, provide information on how to return these items.
- Contact Information: Provide contact information in case the employee has any questions or concerns.
- Closing: End the letter with a professional and respectful tone. Thank the employee for their service and wish them well in their future endeavors.
Why Write a Letter of Termination?
Termination letters serve two primary purposes: they help employers maintain records of employee terminations, and they provide employees with clarity, aiding them in their transition to their next career stage. Additionally, a positive relationship with former employees contributes to the organization’s reputation and can help prevent future turnover. In the event of a lawsuit, a termination letter with all the dismissal details reminds the employer of the rationale for the dismissal and provides documentation to present in court.