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How to Write a termination letter

How Should You Terminate an Employee?

Resignations by employees for various reasons such as better career prospects, personal reasons like relocation, proceeding for higher studies, going abroad, etc. are quite common and frequent. At the same time, employers are also forced to terminate the services of employees for different reasons. If an organization downsizes, there would be substantial job cuts that might be in hundreds or thousands, depending on the size of the company and the financial necessity. The termination in such a situation is completely different. Still, dismissal of a single employee also comes up on several occasions due to poor performance of the employee, serious misconduct by the employee or violation of company policies.

Most organizations spell out clearly at the time of appointment itself that they have the right to terminate the services of an employee without providing any notice or cause. Still, the standard practice is to provide a notice of termination to the employee with a specific period or make a payment of an amount equivalent to the stipulated termination period for instant termination. Whatever be the mode of termination, the employee would be eligible for all statutory compensations that have accrued in the account of the employee.

The letter of termination issued to the employee should be concise and clear. It should contain all relevant information about the termination of the employment. The following steps would safeguard the interests of the company while presenting a termination letter to the employee.

  • If there has been any specific contract between the employee and the organization, the employer should fulfill the obligations of the contract during the termination. If the employer does not comply with all the required formalities associated with the termination of an employee, including local laws, the possibility of the employee approaching labor authorities or a court would arise. This would lead to extended legal battle that could damage the reputation of the company, which should be avoided. Further, the company would be spending substantial time and money to counter the termination lawsuit. If the judgment ends in favor of the employee, the company might have to pay hefty fines and also reemploy that person.
  • Before preparing the letter of termination, the employer should review all the records related to the employee such as employment agreement, evaluations, reviews, letters, and other files and correspondences.
  • An employer could not terminate an employee for reasons that are extraneous to the company, such as personal bankruptcy or reports of any unlawful activities outside the company. If such situations arise, it is better to seek the advice of a professional employment lawyer, if the company does not have its own legal advisor or legal department.
  • If there are strong and valid causes or reasons for termination, the employer would be able to issue the termination letter without notice or through payment of any extra compensation. However, these causes should be specific and clearly mentioned in the letter of termination. Reasons like drug use, contacting competitors and passing on company information, sexual harassment of other employees, gross insubordination, constant poor performance, etc. are just causes for issuing such instant termination letter.
  • If the termination letter is without such causes, the employer should either proceed according to the terms stipulated in the appointment letter or should follow the local, state, and federal laws relating to employment and termination. These laws could vary for each type of employee, each industry, and each state or country. If mass layoffs are on the plan of the organization, it might be necessary to issue notice of 60 days under federal law.
  • After the completion of the termination of the employee, the employer should pay all the amounts due to the employee within a reasonable period. Most states have laws that allow employers specific periods before which they should make such payments.
  • If the employer presents any severance pay to the employee along with the letter of termination, it is advisable to obtain a letter of release from the employee in return for future records. This would prevent the employee from filing any lawsuit against the organization. However, this severance pay should not be part of what is legally due as payable to the employee but over and above those amounts.
  • The termination letter should not contain anything that could be construed as discriminatory, unfair, or biased. The reasons for issuing the letter of termination should spell out the facts in a courteous and professional manner. There should not be any language or content that could appear to be derogatory, demeaning, or insulting, since such letters could work against the company in a court of law.
  • The termination letter should discuss only about the performance and activities related to company policies and should not involve the individual personality of the employee. However, if the behavior and attitude of the employee has been really abominable that could set a bad precedence for other employees and affect the company interests, the employer should specifically mention that in the letter of termination.
  • After an employee has been terminated, the company should take steps to disable the passwords and other access methods of the employee to the organization and its records. If the employee had been familiar with any company passwords, they should also be changed.
  • The employer should ensure that the employee has returned all company property, such as cars, keys, credit cards, access badges, ID cards, company equipment, and company documents before making the final payment to the employee.
  • The executive handing over the termination letter to the employee should obtain the signature of the employee in a copy of the letter as acceptance. It is advisable to keep another person as witness during this occasion, since the employee could refuse to sign the copy. In such a situation, the witness would be able to sign the termination letter copy indicating the refusal of the employee to sign the letter copy. This copy signed either by the employee or the witness should be placed in the file of the employee.

The above instructions should provide any employer with a termination letter format that is suitable for the occasion. The sample termination letter provided below should also give the employer a clear idea of how a termination letter format should be.

Sample Termination Letter

James Faulkner
General Manager
ABC, Inc.
97, Anderson Street
City Center, New York34567

July 15, 2013

Michael Franklin
457, Jefferson Street
Brooklyn, New York24756

Dear Mr. Franklin,

I am constrained to advise you on behalf of ABC, Inc. that we are terminating your employment as Assistant Manager with the statutory one month notice, effective from today for failure in the performance of your duties according to company stipulations and other reasons mentioned in detail here under.

I served you this notice verbally at the personal meeting I had with you today in my chamber in the presence of Mr. Joseph Englewood, Manager of our Human Resources Department.

The main reasons for the termination of your employment with us are:

  1. You have been consistently underperforming and not delivering assignments on target dates, even though you are fully aware of the importance of meeting deadlines as an Assistant Manager, a responsible position.
  2. We warned you several times about the company expectations of performance of employees, since we have clearly stipulated your duties and responsibilities in your appointment letter. Your continuous failure in these duties and responsibilities has immensely disappointed us.
  3. Your behavior with those working under you and with your superiors has not been proper for a person in your position. Our warnings on this aspect have also had no effect on your behavior. We cannot allow other employees to develop resentment and get demotivated due to your ignoble behavior. That will affect the performance of the entire organization.

The termination of your employment is effective from August 14, 2013. You are requested to hand over and transfer all the duties and responsibilities assigned to you to William D’Souza, Chief Manager before August 14, 2013. We will be paying all the statutory and other employee entitlements into the bank account that you have nominated no later than August 20, 2013, after due processing of all amounts payable to you until now and any amounts payable by you to the company. You should return all the company properties with you and your personal company ID before getting relieved on August 14, 2013.

I have made it a point to enclose a statement of your service. I have also attached a copy of the official certificate of employment separation submitted to the relevant authorities.

Yours sincerely,

James Faulkner
General Manager


1. Your Statement of Service
2. Copy of Official Certificate of Employment Separation.

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