How To Write a Termination of Employment Letter

By Indeed Editorial Team

Published 21 July 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Terminating employees is a challenging responsibility of business owners and managers. Handling this process professionally is essential to maintaining the company's reputation. By learning the steps of writing a letter to terminate employment, you can ensure that you dismiss employees politely. In this article, we explain what a termination of employment letter is, what to include and provide examples of letters of termination for different causes.

What is a termination of employment letter?

A termination of employment letter is a formal document from an employer to inform an employee that they're no longer going to be employed by the company. The letter states the reason for termination and notifies the employee of the next steps they should take in this situation.

This letter is a courteous and professional way to terminate employees while maintaining the company reputation.

Types of termination letters

There are three general types of termination letters:

End of their contract

When the employment contract ends, you can notify that employee with a termination letter. For example, you may use this type for freelancers, independent contractors or third parties with whom your company had a business contract with. It's important to reference or include the original employment contract in the termination letter.

Related: Everything You Need To Know About a Proof of Employment Letter

With a cause

This letter is for termination of employment resulting from employee behaviour or performance. For example, if an employee violates company policy, this is termination with cause. When an employee exhibits unacceptable behaviour, it's useful to document these occurrences in order to provide a reasonable cause for dismissing them.

Without cause

In instances of downsizing and budget cuts, a company may need to dismiss an employee. Since it's not through the fault of the employee, they refer to this type of termination as without a cause. This is an unfortunate situation and it's important to remain transparent with employees.

Related: How to Deal with Job Loss

Are you required to provide a termination letter to employees?

The law requires employers to give employees a one-month notice when terminating their employment unless otherwise specified in the employment contract. Sometimes the employer and employee may agree to pay the employee for the specified period, but they may not work during that time.

If the employee has only been with the company for a month or less, the law may not require the business to give a month's notice.

6 steps to write an employment termination letter

Follow these steps when writing a letter to terminate employment:

1. Notify your employee of the termination date

A notice of termination starts by informing the employee of their contract termination and when this comes into effect. Businesses must give employees notice and should provide a specified amount of time before employment ends.

Related: How to Write a One Month's Notice (With Template and Example)

2. Provide valid reasons for termination

State the reasons for dismissing an employee in your termination letter. There may be many reasons to terminate an employee, including behaviour, performance issues, contract agreements or downsizing within their department or the company. It's important to be polite and transparent when writing a termination of employment letter and to provide details so that the employee understands why they're being dismissed.

Ensure that you document your reasons for termination to avoid accusations of discrimination.

3. Inform the employee about their benefits

After explaining why you must end their contract, inform your employee about the status of their benefits. Also include information about how they can claim their last paycheck. If you're offering a severance package or any additional forms of compensation, put this information in the letter.

4. Give instructions to return company property

In some cases, employers provide employees with computers, cell phones, keys or a uniform. These items are company property and you may need to remind employees to return these materials when their employment ends. Provide information about when and where they should return these items.

5. Reference employment contracts

When a person receives employment, they typically sign contracts. These contracts include non-disclosure agreements and legal documents about the business's and employee's rights. It's important to reference and attach these forms to the letter of termination so that the employee is reminded of their legal bindings.

6. Provide contact information for human resources representative

Before closing your letter, direct the employee to a representative in human resources. This is helpful if the employee has questions about their termination. It's also a courtesy to employees that the company cares about their concerns.

Tips for writing an employment termination letter

Writing a termination letter can be challenging. Here are tips to help guide you:

Use a professional tone

It's important to speak formally despite the relationship you may have with the employee. A termination letter is a business document and should have a professional tone. This includes proofreading to avoid grammatical or spelling errors.

Try to be positive

Regardless of your reasoning for termination, it's important to remain positive and kind. It's more likely that the employee accepts their termination if you're polite and professional when informing them. One way to avoid negativity about the employee is to state only the facts about their termination.

Be concise

Include only the necessary information about their dismissal to be brief. By offering the HR contact, you're able to give the employee more information if they request it. Remember the purpose of the letter is to give a formal notice of the end of their employment.

Termination notice template

The following is a termination notice template to help you draft your own:

[Date letter is drafted]

Dear [Employee's full name],

This letter is to inform you that your employment with [company name] will end as of [date termination is effective].

[List your reasons for terminating their contract].

[Inform them of the compensation or benefits they can expect to receive].

[Explain what happens with their benefits including life insurance, health insurance and retirement].

If you have questions or concerns please contact [name of a contact with contact info].

Sincerely,

[Your signature]

Termination letter example

Here are examples of employment termination letters for differing situations:

Termination of employment with a cause

This example letter of termination results from inappropriate absences from work that violate company policy:

June 19, 2021

Dear Ally Tsui,

This letter is to inform you that your employment with Advanced Technology will be terminated, effective on July 19, 2021.

We at Advanced technology have decided to terminate your employment based on the following reasons:

December 21, 2020, you missed a day of work without approved leave or notification of your absence. At this time, we provided you with a formal written warning to explain your absence was a violation of our company's attendance policy.

On January 21, 2021, you were once again absent from work without notifying a manager of your absence. You received a second written warning about unapproved absences and we gave information that a third incident would result in your dismissal.

On March 15, 2021, you were absent from work without an approved leave, which has resulted in your termination from our company.

We will mail your final paycheck to your address. Your healthcare benefits remain effective for 60 days from your termination date of July 19.

We request that you please return your company laptop and uniform to your manager before the end of the day on July 19.

If you have questions regarding your compensation, benefits or the company policies, please contact our human resources manager, Julia Wong at 23452345 or jwong@companyemail.com.

Sincerely,

Joseph Lau

Termination of employment without a cause

This example of a termination results from company downsizing:

July 1, 2021

Dear Kim Lee,

This letter is to inform you that your employment with Time's Clocks is ending on July 30, 2021.

We regret to inform you that in recent months Time's Clocks has been struggling financially because of a decrease in sales. We've exhausted other options to maintain the company budget and unfortunately were unsuccessful, which has led to cutting labour costs.

We reached the conclusion to reduce our workforce by 20%. We regret to inform you that your position as a clock artist is a part of our reductions and your job title will be eliminated. This decision is final.

We will mail your last paycheck and you will also receive a $20,000 severance payment. It's important that you sign and return the attached claim document to ensure you receive this severance payment.

Regarding your healthcare, your insurance remains in effect for 120 days post-termination.

Please return your company cell phone, uniform and ID badge on your last day of employment.

Sometime this week, a human resources representative will reach out to you to schedule a meeting to discuss your benefits and compensation. If you have additional questions, please contact our human resources manager, Lucy Lung. You can reach her at 23452345 or lucylung@timesclocks.com

We appreciate your contribution to the team at Time's Clocks and wish you well in your future endeavours.

Sincerely,

Joseph Lau

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