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Termination Letter Templates & Examples

One of the biggest challenges HR professionals face is dealing with unproductive and troublesome employees, who add nothing to the team, and instead, act as a burden wasting everyone’s time. It might sound a bit harsh, however, the best course of action is to get rid of these employees and hire more efficient people to replace them. You just can’t fire employees right away, there are a few formalities that need to be taken care of, and writing a termination letter is one of them. In this guide, we will explore how to write an official termination letter and provide some templates to guide you.

Termination Letter Anatomy

With the rising workforce globally, terminating non-valuable employees is quite essential for HR professionals. However, making the employee understand why the ending has occurred and effectively writing a termination letter can simplify and ease the process during an uncomfortable event.

What is a Termination Letter?

A termination letter is a legal document given by an employer to notify an employee of the termination of their employment. A termination letter, also known as a letter of termination or notice of termination, mainly includes the name, designation, name of the manager, and most importantly the reason for termination. Employers must ensure the termination letter complies with all applicable state and federal laws to avoid potential legal issues.

Employee termination can occur due to various reasons including bad employee performance, irresponsible behavior of employees at work, misconduct at the workplace, sudden loss in the organization’s business, and so on. In case of any employee’s bad behavior or poor performance, organizations take necessary actions before termination, like warning in case of misconduct or arranging PIP (Performance Improvement Programs) in case of poor performance.

What Needs to be Included in a Termination Letter

Since a termination letter is a formal business document, it needs to include some critical pieces of information, without which it is incomplete. Therefore, here are the most essential things you need to include in your letter of termination:

The Effective Date of Termination
After addressing the letter to the recipient, the first line should clearly state that the employee’s employment is being terminated and the effective date.

The Reason for Dismissal
As an employer, you need to explain whether the termination is with cause, without cause, or the ending of a business contract. If terminating with cause, you may wish to offer authentic examples that support the reason. Remain direct and clear to eliminate misunderstanding or misinterpretation.

Information Regarding Clearance and Benefits
Provide details about what the employee can expect regarding outstanding wages and special compensation, such as severance pay. This is also the place to include any information regarding health and insurance benefits and pension or retirement plans.

Returning Organization Property
Let the employee know what organization property needs to be returned, by when and to whom. Providing a list of property and equipment ensures that the organization receives its assets back, and the employee has an easy checklist to follow, ensuring that nothing is left out.

Reminder of Signed Employment Documents
Employees sign several documents when they are hired and throughout their tenure. Reminding the employee of these agreements by providing a copy ensures they maintain non-disclosure and confidentiality agreements.

Details of an HR Representative
Provide a contact name, phone number, and email address of an HR representative or another organization’s representative that the employee can contact with questions. This is especially important for the employee to tie up loose ends regarding compensation and benefits.

Why Employers Use a Termination Letter?

Employers typically use a termination letter for three essential reasons, which are as follows:

To Maintain a Written Record
Maintaining accurate personnel files is an integral part of any HR policy. Creating a record to show an employee’s dismissal is part of the responsibility of the organization. If there is ever a legal dispute, especially in the case of a cause termination, the responsibility of facts and documentation is on the organization and not the dismissed employee.

Provides Time
Terminating an employee is never easy but using a termination letter provides the employee with time to digest the situation directly and compassionately. Providing a termination letter gives the employee a written record to review with details about their end date, compensation and benefits, and any next steps they need to take. A letter of termination is a respectful way to end the employment agreement while still making the decision final.

Maintain Professionalism
Providing a termination letter is a professional way to end employment. As many companies request a letter of resignation, providing a letter of termination is the equivalent of professional courtesy. Treating an employee with respect and aiding in their transition is essential to being a good corporate citizen and maintaining an excellent reputation. It also maintains professionalism between the organization and the employee going forward.

Termination Letter Templates & Samples

Here are a few different types of templates that you can use to create a letter of termination:

1. Basic Sample Termination Letter Template

Dear [Employee’s Name],

I regret to inform you that as of [Termination Date], you will no longer be employed with [Organization’s Name]. Due to [Insert Reason for Termination], we believe this is the soundest decision we can come up with at the moment.

From [Termination Date] on, you will not be qualified for any payment or benefits that were previously associated with your role. Therefore, kindly return [List of Organization’s Possessions that Must be Returned] before [Date] to [HR representative’s Name or Any Concerned Person].

You are entitled to your salary until [Termination Date], and we will compensate you for your remaining vacation days. Moreover, you are also eligible for severance payments, and therefore, you will be offered [Amount] on [Termination Date]. (You will receive a separate letter with the details of the settlement or other corresponding information that you are permitted to receive from us).

We would also like to remind you that you have signed a non-compete, non-disclosure, and non-solicitation agreement with [Organization’s Name]. If you have any knowledge about our employees, customers, or other stakeholders stored on paper or any of your appliances, kindly delete that information immediately.

If you need any clarifications or want to ask further questions, I am at your disposal for up to [Number of Days] working days after your last day of employment. We wish you the very best of luck for your future!

[Your Name and Signature]

2. Poor Performance Termination Letter Template

Dear [Employee’s Name],

I regret to inform you that from [Termination Date], you will no longer be employed with [Organization’s Name]. According to our observation, the reason for your dismissal is your receded performance over the past six months.

After the conclusion of your Performance Improvement Plan, we decided on this final date, i.e., [Termination Date]. From this date onwards, you will not be qualified for any settlement or benefits that are associated with your employment. Kindly return your [List of Organization’s Possessions that Must be Returned] by [Time] on [Date] to our HR office.

You are authorized to your salary up until [Termination Date], and we will recompense you for your remaining vacation days. We are also going to provide severance pay that will amount to two monthly salaries. You will also receive a separate letter with the complete compensation details and information about your health coverage.
I would also like to remind you that you have signed a non-compete, non-solicitation, and non-disclosure agreement, therefore, if you have any information about our customers, employees, or other stakeholders stored on paper or your devices, you must delete it immediately. In case of any queries, I will be at your disposal until the end of next week. Best of luck for your future!

Regards,
[Employer’s Name]

3. Employee Termination Letter Sample Due to Prolonged Absence

Dear [Employee’s Name],

I am apologetically informing you that this letter confirms that your employment with [Organization’s Name] stands terminated from [Termination Date]. The reason for termination is the multiple unexplained and uninformed leaves of absence from work for prolonged periods that you have taken.

I assure you that you will receive your entitled severance package and will also receive a statement detailing your accrued benefits. [HR Executive’s Name] will discuss the final details with you and will also answer your questions or doubts. Kindly contact [him/her] at the earliest opportunity to discuss your termination process and final package.

We believe that this action was deemed necessary from our side. We wish you greater success in your future endeavors!

Yours truly,
[Employer’s Name]
[Title]
[Signature]

Conclusion

A termination letter is a crucial document that should be carefully drafted to ensure compliance with state and federal laws and to maintain a positive relationship with the employee. Although giving a letter of termination to an employee might create an unsettling environment, however, by making the process smooth and manageable for the employee, you might gain loyalty and trust from your existing employees.