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A termination letter is a formal letter written by an employer in order to tell an employee that their employment with the company is being terminated.

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Sample Termination Letter

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What is a termination letter?

A employee termination letter is a formal letter written by an employer in order to tell an employee that their employment with the company is being terminated. The letter lets the employee know when they are being terminated and may include information about why they are being terminated. Other details can be included as necessary.

Other information that may be included in this letter includes expected severance pay, the date of the last paycheck, benefits information, and the retrieval of company property.

If you are writing a letter to fire an employee or to complete a layoff, try to include as much information as possible. This ensures the employee can make a smooth transition from their current position and company.  Consider using legal counsel if you are concerned about knowing the personal employment and termination laws for your state. This will ensure you write a professional and accurate letter.

Other names

Employee Termination Form, Employee Termination Letter, Employment Termination Form, Letter to Fire an Employee, Pink Slip, Separation Notice

When should you use a termination letter?

  1. It is legally required by your state.
  2. If the employee is not eligible for unemployment benefits.
  3. You want to provide the employee with information.
  4. You want to legally document the circumstances of the termination.

When should you not use a termination letter?

There is no reason to not use one as long as the letter supplies basic information and explains the facts.

Types of termination letters

Basic

The most commonly used type.  It provides information that an employee needs to know about their final pay and benefits.

Sample Termination Letter:

September 20, 2018

Dear Mr. Jones,

This letter is to inform you that your employment as an Account Executive in the Sales Department of The Manufacturing Plant will end as of September 20, 2018.  This decision is final.

You will receive your final check and payment for your remaining leave time today.  Your health care benefits will remain active for the next 90 days.

We ask that you return your company ID and key card before the end of the day.

If you have any questions about your compensation, benefits, or this company’s policies, please contact Lisa Smith in Human Resources at (212) 555-5555.

Best Regards,

Your Supervisor

Layoff

This is used when an employer has to lay off employees.  The letter should contain information about the layoff, the benefits the employee will receive, and the last paycheck.

Sample:

September 20, 2018

Dear Mr. Jones,

This letter is to inform you that your employment as an Account Executive in the Sales Department of The Manufacturing Plant has been terminated.  The effective date of termination is October 15, 2018. This decision is final.

You have been terminated because of our recent merger with The Manufacturing Corporation.  Our recent merger has necessitated a 15% reduction in our combined workforce. Unfortunately, your position has been eliminated.  

You will receive your last paycheck and payment for your remaining leave time on your last day.  Your health care benefits will remain active for the next 180 days.

You are also entitled to receive a $10,000 severance package that will be given to you as soon as you sign the appropriate non-disclosure and non-compete forms.

We ask that you return your company phone and ID card on your last day of employment.

If you have any questions about your compensation, benefits, or this company’s policies, please contact Lisa Smith in HR at (212) 555-5555.

Best Regards,

Your Supervisor

Termination for Cause

If you terminate an employee for cause, the letter should specify the reason for the employee’s dismissal.  This documents the reason in case of a dispute over unemployment compensation or other lawsuit.

Sample:

September 20, 2018

Dear Mr. Jones,

This letter is to inform you that your employment as an Account Executive in the Sales Department of The Manufacturing Plant will end as of September 20, 2018.  This decision is final.

You are being terminated because on September 20, 2018, you brought a loaded handgun with you to work.  The Manufacturing Plant has a zero tolerance policy for weapons in the workplace. You agreed to abide by this policy when you signed your employment contract on January 30, 2015.  A copy of that signed contract is attached to this letter.

You will receive your last paycheck and payment for your remaining leave time today.  Your health care benefits will remain active for the next 30 days.

We ask that you return your company ID card before the end of the day.

If you have any questions about your compensation, benefits, or this company’s policies, please contact Lisa Smith in HR at (212) 555-5555.

Best Regards,

Your Supervisor

Components of a termination letter

The letter should contain a few key elements:

  • Name of the company
  • Termination date
  • Reason for termination and any prior warnings
  • Outstanding requirements - anything that the employee owes to the company or needs to return to the company
  • Final paycheck and severance pay
  • Benefits - how long the employee will continue to receive any benefits
  • Right to appeal - if the employer is giving the employee a right to appeal their termination  

How to Write a termination letter

  1. Add the employee’s name, position, employee ID number, department
  2. Add the name of the supervisor handling the termination
  3. Include information about severance, health insurance, and any additional compensation that the employee is entitled to
  4. Note any property that the employee should return to the company
  5. Detail any applicable agreements that the employee has signed including confidentiality, non-solicitation, non-compete
  6. Ask your legal counsel and/or HR department to sign off on the letter before sending

Legal Considerations

An employment termination letter should contain certain terms to ensure that the company is protected from litigation: name of company, termination date, reason for termination, outstanding requirements, benefit and severance information, information about any appeals process.

Are termination letters required by law?

United States federal law does not require providing a letter upon termination.  However, some states require them. The Society for Human Resource Management recommends providing a letter when you terminate an employee.

Do employers have to give a reason for employee termination?

Employment is generally at-will, which means that an employee can quit or be terminated with or without a reason or notice.  However, every company has its own policies and legal responsibilities regarding employee termination. Check your employment agreement, employee handbook, and other HR documents to determine whether you are required to terminate an employee with just cause.  You should also verify your state law requirements. If you have any questions about whether you can terminate an employee, you should seek legal advice.

How to avoid wrongful termination

You should take precautions to avoid wrongful termination, which means firing someone for an illegal reason.  To avoid a wrongful termination, you should lay out your expectations for your employees in an Employee Handbook.  You should also set out the terms of employment in an Employment Contract. Be sure to maintain complete and accurate records of any violations of employee policy and disciplinary actions taken in the employee’s record.

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