Letting someone go is never easy, regardless of the size of your company, team, or industry you activate in. But as an employer, it’s something you need to do, sometimes more often than you would like to.
To go through a fair and painless termination process, your organization should have clear procedures in place regarding this issue, and everyone should make sure they are followed. The first thing that comes to mind about procedures is the existence of a termination letter(or more than one template) that must be sent to the employee you are terminating. You must ensure you issue a clear termination letter with no ambiguous language. Otherwise, you risk many legal issues, plus a negative impact on the company, such as bad morale, low productivity, and lower retention levels.
Knowing this topic's sensitivity, we have put together all the information you need to sail through these types of situations in this article. We will clarify what termination means, how to handle it with termination letters, what a termination letter should contain, and some examples of templates.
CONTENTS:
It may seem a basic term, but we want to ensure you know exactly what it means.
Understanding the nuances of employee termination is crucial. It refers to the situation when an employee's work and employment contract come to an end, and this knowledge can help you navigate these situations with confidence.
I Voluntary:
When the employee leaves your organization based on their own will or has reached retirement age.
In this case, the employee must hand the employer a resignation letter and provide a notice period.
OR
II Involuntary:
When you, as an employer, terminate his contract for several reasons, we include the discharge with cause(due to poor performance, misconduct, or other violations). On the other hand, there is the discharge without cause when you, as an employer, are terminating the contract, usually due to economic circumstances-lay-offs imposed by external factors.
There is a third option, a different case of ending an employment contract, which also falls into the involuntary type:
III End of (business) contract:
When an employer that hires a short-term employee/consultant/partner decides not to renew the employment contract beyond the initial duration.
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It's important to note that in all these cases, the employer has a legal obligation to provide the employee with a suitable termination letter. This ensures transparency and clarity in the termination process.
Terminating an employee may be one of the most difficult decisions a manager is forced to make. The reasons are different, it can be because of economic duress, misconduct, poor performance, etc.
If you are the manager of an employee who has constantly performed below the desired target and also dropped the ball on an important project, you may be inclined to terminate them verbally. May take a beat and think again.
It’s better to take the time to design a termination letter to be safe from all potential legal issues.
Termination letters are also known as pink slips, contract termination letters, letters of separation, or notices of termination of employment.
These letters of termination are a form of written document that notifies an employee they have been terminated and explains the next steps they need to take.
The reasons for ending an employment contract can be various, ranging from incompetence, misconduct, poor performance, layoffs, or any other justifiable basis.
We have another great resource for you! A termination checklist, to ensure you complete every step of this process.
There are no strict rules for writing a termination letter, as long as the essential information is included, but we have compiled some tips on best practices for creating such a document:
It's crucial to maintain a professional and respectful tone, avoiding any use of sarcastic language or mean words. Remember, the employee who is being terminated may be experiencing a difficult moment, as their income is being affected. Demonstrating empathy in this situation, understanding their perspective, can go a long way in making this process less painful for both parties.
You should avoid phrases such as:
Before writing the letter, it's essential to collect all the data you need. This ensures that the document is comprehensive, leaving no room for confusion or misunderstanding. It also helps you feel more prepared and organized in this process.
Regardless of the reason for termination, every such letter should include the following aspects:
The reason for termination is the most crucial part of the letter, so it's essential to be honest and clear. Avoid using ambiguous words that could lead to misinterpretation. The more straightforward and transparent you are, the better the employee will understand the decision.
You should clarify that your decision is final, even though you mention that discussions for explanation can take place if the employee wants this.
As mentioned above, there are three types of involuntary termination; therefore, the letter you send the employee should reflect the types of termination individually.
Terminating a contract without a cause is usually called a layoff and is generated by economic circumstances outside the employer’s control. One of the most common reasons for letting people go is downsizing. If you're drafting a termination letter for this reason, explain why you're downsizing and how their position will be affected.
We face this type of termination when there is poor performance, misconduct, or bad behavior.
If you are concerned about an underperforming employee, it's crucial to follow the internally established steps to help them improve before termination. This could include offering a mentor/coach, feedback meetings, or additional training. This approach ensures fairness and gives the employee a chance to improve.
If misconduct is the cause for termination, we refer to behavior that violates internal regulations, the code of ethics, or even the law, such as stealing from the company or fraud.
When an employer that hires a short-term employee/consultant/partner decides not to renew the employment contract beyond the initial duration.
These situations include contracts with temporary employees, consultants, partners, or freelancers.
Describe the offboarding process clearly, and ensure the terminated employee knows what steps should be taken moving forward.
Plus, assign a person from HR to be the contact in case more information is needed and for the exit interview. For more tips on exit interviews, check out our article on this topic.
Extra tip! When deciding to terminate a contract, do not base it on a comparison between that employee and others. Use your business’s standards, targets, and behavioral expectations (as laid out in your employee handbook) as the reference point.
Dismissing an employee is not an easy job, and the document you write should be extremely clear. Here are some tips on how to achieve that:
Be direct and unambiguous
Start strong, and state the purpose of the letter and the consequences, such as:
"This letter is to let you know that your employment with [Company] will come to an end as of [date] for [reason]."
From this point on, continue with clear language and avoid vague statements, like “it’s not how we thought it would work”, “you are not the best for us”.
Provide reasons and indicate policy/regulation offenses
The decision you made should be followed by specific reasons, like:
“Your employment is being terminated due to repeated poor attendance, including 10 unexcused absences in the past 2 months, in violation of our Attendance Policy, Section 9.2.”
Make notes regarding previous warnings or meetings for performance reviews, so as to make it clear the dismissal is as per company regulations and is not arbitrary.
Uphold a professional tone
The letter should be based on facts and violations of policies, try not to use inflamatory phrases like:
“You have been ignoring all our warnings and you don’t care about this job!”
Just describe the facts in a formal way:
“Despite three warnings regarding your habit of coming late at work, your tardiness has continued, which gives us no choice but to terminate your contract”
Use a sympathetic, but firm approach
You should express empathy for the impact the termination decision has on the employee, but do not give them false hope:
“We feel sorry that the economic hardship is forcing us to do lay offs, but we appreciate your service and efforts.”
Provide information regarding next steps
Offer information regarding the offboarding, such as:
"Your final paycheck will be deposited on [date]. Please return your company laptop, phone and keycard to HR department by [date]."
It’s a good way of reminding the employee of their responsibilities.
Offer help in the transition process
In the case of layoffs this can be a very appreciated course of action:
"You'll be eligible for your benefits until [date]. We're also offering to assist with a job search, through a third party service.”
Double-check the letter
A termination letter is very important, so it’s crucial to proofread it for typos, and make sure it’s clear, and accurate. All dates, numbers and policy references should be accurate. Another set of fresh eyes should help, so maybe a legal counsel of an HR representative could check it. All to eliminate posible mistakes that can lgenerate legal issues.
Having a meeting with the person you are terminating is as must, and so is offering them a hard copy of the termination letter. An HR representative should be present in the meeting, so as to eliminate possible mistakes that can make the company liable in the future.
As is it in any employment matter, a written record of the termination is crucial. Also, consider encouraging the employee to read the letter during the meeting, so as to be able to ask about any difficulties they may have. Plus, it’s a good way to relieve tension and make sure they do not want to take any actions to distroy your brand reputation.
Theory is great, but we also need some practice. Let’s see 2 templates you can use when needed. We will focus on one for termination with cause and the other without cause.
[Date]
Dear Mr.[Name of the employee]
This document is to notify you that your employment with [Your Company Name] will end as of [Last day of work]. This decision is definitive and cannot be changed.
The following are the grounds for why you were let go.:
Current economic conditions have caused a significant decline in sales, generating a 20 percent workforce reduction at our company. Unfortunately, your position, as many in your department, is included in this reduction and has been eliminated.
Note that you will receive your final paycheck after your last day and payment for your remaining leave.
Your health insurance coverage will remain in force 2 months after your termination becomes effective.
We will need you to return the company vehicle, key card, laptop, and cell phone on your last day of employment.
You have signed a variety of agreements that forbid you from revealing confidential information, so just be mindful of that. Please take a look at the copies attached.
Contact [HR contact person] if you have any queries about this letter or the terms of your termination.
Sincerely,
[Name of manager]
[Date]
Dear Mr.[Name of the employee]
This letter is to let you know that as of [Last day of work], your employment with [Company name] will come to an end. This decision is not reversible.
Your employment was terminated for the following performance reasons:
On May 7, 202X, you were in performance coaching (meetings and mentoring) and were told that if the employment relationship with us was to continue, your performance would need to improve. You were given a second warning on April 30, 202X, and told that if your performance didn't improve in the following 60 days, your contract will be terminated.
Unfortunately, you have failed to meet the performance targets agreed upon with your supervisor. Your employment has been terminated as a consequence.
Your last check for this month will arrive in the mail in seven days.
Your medical benefits will continue to apply for 30 days.
Before the end of the day, we will require you to return the company vehicle, the key card, the notebook, and the smartphone.
Please contact [HR contact person] if you have any queries regarding pay, benefits, corporate property, or policies you have accepted.
Sincerely,
[Name of manager]
Dear Michael Smith,
Subject: Termination of Employment
I regret to inform you that your employment as a Sales Associate at Retail Company will be terminated, effective March 28, 202X, due to excessive tardiness.
In accordance with company policy, employees should not exceed 7 days of tardiness in a month, with tardiness defined as arriving 16 minutes past the scheduled start time. The company follows a progressive disciplinary process for tardiness, with verbal and written warnings, as well as suspensions without pay, issued for repeated offenses. Termination is the final step in this process.
Despite the efforts to accommodate your scheduling needs and address your concerns, your attendance has not improved. After careful consideration and consultation with the management team, it has been determined that termination is the appropriate course of action.
Please ensure that you surrender your company ID, store key, and company-issued uniform by March 28, 202X. Furthermore, your company time and attendance platform access will be revoked on the same date. Please also be reminded of the confidentiality agreement you signed with us, and refer to the attached document for your reference.
If you have any questions or require further clarification, please feel free to contact Shelly Harper at shellyharper@company.com.
We appreciate the contributions you made during your time at CompanyName and wish you the best in your future endeavors.
Regards,
Jack Foster
Head of Human Resources
CompanyName
Dear [Employee Name],
Subject: Termination of Contract
I hope this letter finds you well. I am writing to inform you that, regretfully, we have decided to terminate our contract with you, effective [termination date]. This decision was made after carefully considering several factors, including our current business needs and objectives.
While your work has been satisfactory, recent changes in our business strategy have caused us to adjust our current employment relationships. More specifically the project you were engaged has finished. Consequently, we must bring our collaboration to a close.
We appreciate the services you have provided during the term of our agreement and the professionalism you have demonstrated. Per the terms outlined in our contract, we will fulfill any outstanding payment obligations for services rendered until the termination date. Please expect to receive your final payment within [specific timeframe, as per contract terms or local regulations].
We would like to take this opportunity to express our gratitude for your contributions and wish you success in your future endeavors. Should any opportunities arise in which your expertise aligns with our needs, we will not hesitate to reach out.
If you have any questions or require further clarification, please contact [point of contact name] at [contact information].
Thank you once again for your collaboration.
Sincerely,
[Your Name]
[Your Title]
[Company Name]
Dear Franco Macordino
We regret to inform you that your employment with GreenEnergyRE is terminated, effective March 24, 202X.
This decision is based on the last six months' performance issues, as discussed. We have carefully reviewed the situation and, unfortunately, have come to the conclusion that termination is the appropriate course of action.
As of March 24, 202X, you will no longer be eligible for any compensation or benefits associated with your position. Please return all company property, including your ID badge, company-issued laptop, and any other equipment, to the HR department by 5 PM on March 24.
You will receive your regular salary up to the termination date, and any accrued vacation days will be compensated accordingly. A separate letter outlining the details of your compensation package will be provided to you.
Please be reminded that you are bound by the terms of the non-compete, non-solicitation, and non-disclosure agreement you signed with the company. Any confidential information or intellectual property belonging to the company in your possession must be returned or destroyed immediately.
If you have any questions or need further clarification, please do not hesitate to contact me or the HR department.
We sincerely wish you the best in your future endeavors.
Sincerely,
Alex Jordan
GreenEnergyRE
Dear [Employee’s Name],
We regret to inform you that your employment with[Company Name] is terminated, effective March 14, 202X.
This is the result of a cautious review of our current business operations. We have concluded that due to [reason for the layoff, e.g., economic downturn, industry sector contraction, restructuring, reduction in workforce], we must regretably eliminate certain positions within the company. Unfortunately, your role as [Employee’s Job Title] has been identified as one that will be affected by the layoffs.
Your last day will be [Last Working Day], but until then you have our undivided support for anything you need. As per local laws and internal regulations, you will be offered the following:
Please reach out to our HR department to discuss any details about the severance package or any other inquiries you may have.
We would like to take this opportunity to express our gratitude for your contributions in all the years here and wish you success in your future endeavors. Should any opportunities arise in which your expertise aligns with our needs, we will not hesitate to reach out.
Sincerely,
[Your name, job title and signature]
Dear [Employee’s Name],
This letter is to confirm that your employment with [Company Name] is terminated effective [Date], due to failure to meet the performance standards of your role as [position]
As discussed during our various meetings on [Dates of performance discussions], your performance has declined rapidly in the following areas:
During our last meeting, we have provided you with an improvement plan, to which you agreed with, but unfortunately, your performance had no visible improvements, which is why we need to terminate your contract.
Your final paycheck, including [Salary, benefits, etc.] will be processed on [Date]. Please make sure to return all company property, including [all items] to [Contact person] by the end of the week.
We are grateful for your dedication and wish you success professionally. Should you have any inquires, please contact me at [Contact information].
Sincerely,
[Manager Name]
[Manager Title]
[Company Name]
We want to point out a few crucial points for which you should not skip sending a termination letter to a departing employee:
Bottom line
There are many reasons an employment relationship ends. As we mentioned, the employee can leave for a better opportunity or be let go for many reasons.
The important thing is that both parties are aware of the reason, and the employer is responsible for writing the correct termination letter.
Remember, these templates are only a starting point, and it's crucial to tailor them to your specific situation and consult with legal professionals to ensure compliance with local laws and regulations.
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