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An employee termination letter is an official written notification that is giving by an employer to the employee. It states the termination of an employee from his employment at a business for a particular reason. It is usually used when the termination is involuntary. Additionally, this letter is also known as a letter of dismissal or a notice of termination.
What is employee termination?
Employee termination is basically a process of firing an employee from a given firm, company, or business. The responsibilities and duties allocated to the employee within the company are absolved. With the help of employee termination letter, the employer indicates that employee’s employment has ended at the company. It also highlights the reason why he or she arrived at this decision. You may also like Dress Code Policy Templates for Employees.
2 types of employee termination letter:
This letter is given to the employee due to unavoidable circumstances like misconduct, economic constraints, etc. These circumstances lead towards the termination of an employee under the following categories;
1. Employee termination letter without cause:
As its name implies, this letter is sent by the employer on his better judgment not because the employee has done something wrong. It could be financial constraints or unprecedented events. For instance, due to COVID 19 pandemic, companies have terminated several employees. Also, make sure that the termination doesn’t depend on individual traits such as gender, disability, age, national origin, and race.
2. Employee termination letter with cause:
Termination letter with cause is sent due to the employee’s wrong actions like his interaction with coworkers, manager, or customers are unacceptable. The cause of termination is mentioned in the letter. Some other reasons may include;
- Breach contract
- Theft of company property
- Violation of company’s ethics
- Extreme insubordination
- A conviction for the crimes
- Falsifying information when applying for a job
Basic elements of an employee termination letter:
An employee termination letter consists of several parts that must be included in the letter. Let us discuss below;
In the header section, include the employee’s information like their full name, ID number, department, and position they held in the organization. This shows that the letter is addressed to the exact person.
Next, include the dates and time that when the misconduct and the onset of economic problems have occurred and from which Date the termination is set to be effective. Dates show the chronological occurrence of circumstances up to the end of obligations. Moreover, mention the reasons for termination.
Receipt of company items:
Write the details of the receipt to whom the employee is expected to hand in the company’s items. These items may include key cards, company vehicles, laptops, etc.
After that, highlights the benefits severance, and other compensation details of the employment contract.
The termination letter must include the legal obligations as agreed in their employment contract. This information helps to protect resources like the companies’ intellectual property.
Final paycheck details:
Lastly, provide the details about the final paycheck that employee hasn’t received yet. Write the payment and the date on which they expect their payments. It protects you from future lawsuits. It might be costly and damaged the company’s reputation.
Closing and signatures:
At the end of letter, show gratitude to the employee for the time they worked for the company. Then, affix you signature. You may also see Employee Training Plan Template.
Reasons to terminate the employment contract:
Due to following instances employment contract can lead to termination;
- Breach of contract
- Impossibility of performance
- Rescission of contract
- Termination by agreement
- Completion of agreement
In conclusion, an employee termination letter is a formal document used when an employer and an employee have to part ways due to unavoidable reasons. This document prevents the company from future disputes. It is also essential for record keeping in an organization.