For employers, rescinding an employee’s contract at any time is daily life. Whether the termination is voluntary or not, it is crucial to have processes in place to ensure you can handle the process as efficiently as possible. This includes distributing an informative and precise termination letter format to ensure that the dismissed employees have the proper details about the tools and information required to proceed beyond their time with the company. If you do, it can result in positive effects on retention and employee relations, morale and productivity, and the possible legal consequences of not firing someone in a proper method.
This is a handy guide to give you all the necessary information. We’ll go over how to draft the Job offer letter format to employees, what details you should include, and the ideal practices to remember. We will also provide two templates for termination letters to start on the right track.
What is the meaning of employee termination?
Before we look at the steps to write a resignation email to an employee, get started by defining the meaning of termination for an employee.
The term “employee termination” refers to the time when the employment of an employee with you ends, whether voluntarily or involuntarily:
Robust termination occurs when an employee leaves your company because they’ve found a new job or reached retirement age.
Termination involuntary when you end an employee’s contract for reasonable motives (they are fired, dismissed, or let go of their employer). This can include termination without reason (typically in the event of economic or other reasons), termination with justification (typically caused by misconduct or issues with performance), and termination in the event of the expiration of a business contract.
In the event of voluntary termination, employees typically provide you with an official resignation letter that confirms their decision to quit their post. In the event of an involuntary resignation, it is your obligation as an employer to send the termination letter.
What is an official letter of termination?
An official termination document commonly referred to as a pink slip, a letter of separation, or notification of termination, is a written notice that informs your employee that you’re endorsing their contract of employment. It could be because of inadequate performance, incompetence, unacceptable behaviour, laid-offs, or any other justifiable reason.
A termination letter is a crucial final step of the employee’s life cycle. It provides employees with the necessary information to start their departure process positively. It also assists you in dismissing employees correctly (or laying off employees properly in the event of termination for the right reason) to avoid any possible disagreements or legal issues.
Whatever the reason for deciding to end the contract of an employee, your letter of termination should contain the following details:
- The reason for the end of (with or without justification)
- Reason(s) for the termination, with evidence supporting the reason
- The following steps in the compensation, health insurance, and other benefits
- A list of items from the company which the employee must return
- Notification of agreements employees signed, for example, a non-disclosure agreement
- Information on the following steps to take regarding internal HR procedures, like the offboarding process and interviewing at exits
- Contact information for HR personnel for additional concerns
What kinds of voluntary terminations exist?
As we’ve already discussed that involuntary termination generally is classified into three categories with no reason (also called a layoff’), with cause (also called “being fired”), and because of the expiration of a contract with a company.
The termination letter you write will be based on the type of termination you handle.
Let’s look at this in more fantastic in detail.
Termination without reason
Also known by the term layoff. This termination typically occurs because of economic factors beyond employees’ control. This was especially evident in the industry of hospitality.
Termination without reason
Termination for cause occurs when you terminate an employee because of insufficient performance or general indiscretion.
In the event of underperformance, you must follow the internal guidelines before sending out a termination notice, including conducting discussions about performance levels and providing coaching to help employees improve their performance.
Misconduct could refer to actions that violate the corporate values and code of ethics, for example, intimidation, violence, or falsifying documents. Also, it includes any behavior that violates the laws, like criminality or theft.
End of Business Contract
The third kind of involuntary termination occurs when the employee’s contract has come to its natural expiration. In this situation, the termination is anticipated, and the letter of termination is officiality.
Is the requirement to send an official letter of termination a legal obligation?
The only exception to this law is when the employee concerned is an employee of an organization or if their decision to terminate is part of the mass layoff or a corporate closure. Other forms of employment generally pertain directly to “at-will” employees, and therefore both you as well as your employee can legally terminate the contract at any time without consent in writing, as long as the reason for termination is justified (non-discriminatory as well as not in breach of union or contract agreements).
However, generally, it’s considered a brilliant idea to offer any employee you’re ousting or cutting off a termination notice. So, everything is written down and includes the date you decided to dismiss, and you can avoid any potential legal battles. Because of this, many businesses include a termination procedure within their policies on HR. It’s equally important to be aware of any local termination laws, as requirements differ from state to state.
What is the significance of the importance of a termination letter?
There are many reasons to send out an employee termination notice whenever you dismiss the employee or cut the employee off:
You receive a written report of every termination, including the dismissal date. This proves that your business performed reasonably and legally when it terminated an employee. This is a way to help you avoid disputes between employees.
The termination letter provides an opportunity to explain all the information an employee must know to get offboarding. This includes information regarding health, compensation, and benefits insurance. It also provides employees with clarity so they know what they are doing. Making sure that your exit procedure is smooth can also help increase your credibility with your employer.
Suppose you decide to dismiss an employee for inefficiency. In that case, you will also receive an acknowledgment in writing that you’ve given the employee concerned every chance to increase their performance and perform to the standards you set before being dismissed.
If you’re firing one of your executives, the termination notice is a reminder of non-compete clauses, NDA, and restraint of trade agreements that the employee has signed.
How do you create a termination letter?
Let’s look at some tips for writing a termination letter to help you know what to include when writing your termination letters.
Set the appropriate tone
If you’re letting an employee go because of downsizing, misbehaviour, or performance issues, it’s essential to remain courteous and professional in all official communications. Be aware that no matter the reason to let someone go, the decision you make can impact the amount of their salary and their health insurance, try to be compassionate when needed. Your decision to end the employee’s employment also puts them in a difficult situation. Therefore, ensure that you give an accessible and actionable next step to ensure that the employee understands where they stand and what they must perform before their employment is removed.
Take all the information you require
Before you write your resignation letter, ensure you have all the details you require.
- This usually includes:
- Basic personal details The basic personal information includes:
- The employee’s name.
- The ID number department.
- The manager’s name.
- The department.
- The job title with the organization.
The reason that you can use for termination. Include any evidence to support it (for example, if the dismissal is a result of the employee’s conduct, you should include details about any previous disciplinary processes and meetings).
It is the official date of expiration.
- Information on the outstanding amount of compensation
- Information on advantages (impact on the health insurance system, unemployment benefits (impact on health insurance, unemployment benefits, etc. ).
- Any belongings of the company that employees will require can be returned.
- Information relating to the severance payment (in the event of redundancies).
- Information on the signing of agreements on non-disclosure and non-compete contracts.
- All of the details are clearly stated within your correspondence.
- Give a specific reason why you should be terminated.
It’s crucial to be clear about the reason behind your decision to terminate the employee’s employment contract. This could be the most crucial element of your termination letter since it informs the employee why they’re being dismissed or laid off.
Be sure to be transparent, honest, and clear in your explanations. For instance, if you have to dismiss an employee without just cause, you must reference any written warnings previously issued or documentation that shows poor performance.
Inviting employees to get in touch with you if they have any questions or wish to contest your ruling is also advisable. Prepare to discuss these matters further. However, make sure to inform them that your decision is definitive.
Be specific about the effective date of the end of employment.
Be sure to include the effective date of the termination in your letter. If you’re cutting off an employee for no reason, you could provide advance notice so they can prepare. If you’re dismissing someone for cause, you could decide that the dismissal will take effect immediately.
Details exceptional benefits and the severance process
If you’re firing someone in a manner that is not based on cause or reason, the person will be entitled to certain benefits. You must include the termination letter information on the unpaid benefits and Severance payments.
The benefits could include a final paycheck with outstanding wages and due PTO or sick payment.
If you’re making employees redundant, you may offer a severance payment in addition to the pink slip. Make sure that you have discussed the terms of the severance package with the employee before you send them their official termination letter.
Offer guidance to help move forward.
Based on the reason for the decision to terminate, you might require guidelines on what happens following. If, for instance, the employee is on notice and you want to prepare a schedule that will assist them in handing over their responsibilities to team members.
It is essential to have transparent HR processes to follow in this regard. This way, you’ll know which exit strategy to use for each dismissal.