Termination Letter: Meaning, How to Write It & What You Need to Know

termination letter
Image source: SHRM

Employee termination is a typical event in the business sector. While it is rarely a pleasant procedure, it is frequently required. If you find yourself in the position of having to let someone go as an HR manager or even a landlord, you’ll want to make sure that you do so in a professional and legal manner. This article is a guide on how to write an employee contract termination letter as well as a lease termination letter, with a detailed template.

What is a Termination Letter To an Employee?

A termination letter is a document used by an employer to notify employees that they have been fired, and it is an important piece of documentation for both HR and legal teams.

Employee misconduct, such as a breach of company regulations or the law, is the most common reason for termination letters.

While termination letters are typically issued by employers to employees, they can also be written by individuals who choose to leave the company voluntarily (i.e., resignation letters).

What is The Significance Of A Termination Letter?

A termination letter is a written record of an employee’s dismissal, containing the cause for dismissal and any other relevant data.

This letter is significant because it proves that your organization terminated an employee in a fair and lawful manner.

But, there is more to it than that.

Termination letters are frequently the final step in a process.

They can close the loop and show that an employee was given every opportunity to meet expectations and improve performance prior to termination.

This is also one of the last pieces of paperwork that a terminated employee will receive from your company.

From that standpoint, a termination letter can clarify your company’s termination procedures and provide insight into what happens next.

Termination letters, particularly when dismissing senior personnel, may also act as a gentle reminder of the employee’s NDA, non-compete terms, and restraint of trade agreements.

If these penalties are contractually obligated, you may also need to arrange a share transfer or sale with stakeholders.

After all, is said and done, these letters must be retained on file for future access by both HR and legal departments.

What Are the Four Reasons For Termination?

An employer may terminate employees for a variety of reasons. In most circumstances, the employer must follow particular steps or criteria to ensure that the dismissal is fair, otherwise, it may be contested at a tribunal.

#1. Failure to perform duties

The most obvious (and arguably fairest) explanation is an employee’s failure to perform their duties correctly. Bad performance can be caused by a variety of factors, including an inability to reach a certain level of skill or even a failure to get along with coworkers and managers. Whether they feel the bad performance is deliberate or not, the employer must always provide a fair warning and a reasonable opportunity to improve before dismissing the employee.

#2. Employee Misconduct

Misconduct is another typical basis for dismissal. This could include consistently arriving late for work or failing to follow workplace procedures effectively. In such circumstances, the employer is normally compelled to deliver an early warning and offer an opportunity to improve. Only if the wrongdoing continued would they be able to fire the employee. The only exception is excessive misconduct, such as theft, assault, or unlawful activities, which may result in summary dismissal.

#3. Long-term illness

Long-term illness may be a valid ground for dismissal, but only if it is not related to a disability and only after you have made reasonable adjustments to allow the employee to continue working.

#4. Redundancy

Dismissal can also occur as a result of redundancy, in which the company needs to cut its staff. There are certain standards governing redundancy processes.

How to Write a Letter of Termination

Composing a termination letter can be challenging, but it is an essential part of the process of terminating an employment relationship.

Your organization is responsible for adhering to all labor regulations and legal requirements in your specific area, although those responsibilities may differ depending on local laws and the cause for the termination. Here’s everything you need to know to write a good termination letter.

#1. Choose your tone with consideration.

Termination letters are an essential component of the employee lifecycle.

Whether employees are laid off or fired due to misconduct, it is critical to remain professional and courteous during formal contact.

Keep in mind that if the termination is unexpected, you will be reducing an employee’s pay, health insurance, and other living necessities while also putting them in an uncertain position.

While the company’s answer to an employee’s well-being is ultimately not the company’s response, you should be aware of these circumstances before beginning the dialogue and demonstrate compassion if appropriate.

Your termination letter should also serve to reduce some of this confusion by laying out clear and concrete future actions, if applicable.

#2. Compile all pertinent information

Before you begin writing a termination letter, gather all of the basic facts you’ll need to complete the task.

This information will vary based on how long a person has been with the organization and what responsibilities they have.

In some cases, you may not require everything.

If you’re terminating a freelancer or contracted employee, it may be as simple as providing a notice of the last day of work and allowing the contractor extra time to complete any remaining work.

#3. Begin with the fundamentals.

Before you start drafting your termination letter, you should start with the basics, such as the employee’s name and position with the organization.

If your company is large enough, you may additionally need to include the employee’s ID, department, and manager or supervisor’s name.

This data can be displayed in a list at the top of the page.

To clearly identify the intended recipient of this information, it should be visible, explicit, and straightforward.

#4. Inform the employee of the date of termination.

One of the most crucial pieces of information is the effective date of termination.

This should be included early in the letter to establish clear boundaries for future company operations.

When firing someone for cause, the termination date may be the same day the letter is issued, effective immediately.

At times, particularly during layoffs and other situations where there is no reason to fire someone, you may issue an effective end date well in advance (often months) to allow staff time to prepare.

#5. Explain the reason(s) for the termination.

The reason for termination is potentially the most important aspect of the entire process from the employee’s perspective because it informs them why they were legally fired.

This section should be clear, honest, and direct.

If employees are fired for cause, you can point to earlier written warnings or months of accumulated paperwork demonstrating poor performance.

More serious issues, such as assault or theft, may also be specified as legitimate causes for termination.

Whatever the reason for termination, be upfront and direct in describing these difficulties so that the employee understands why they were let go.

If the termination is based on a single or recurring event (such as chronic tardiness), offer precise details about that incident.

Be prepared to debate these points with your outgoing team member when you issue this letter (if doing so in person), but bear in mind that the decision has already been taken.

Regardless matter how the employee behaves, you should plan to terminate the employment.

#6. Describe future compensation and benefits.

Even if you terminate an employee for cause, they will still be entitled to certain benefits, which you must state in your termination letter.

Businesses may offer severance benefits in addition to a pink slip.

They are sometimes situational or contingent on some form of NDA. You should be prepared to discuss these topics if they arise.

At the same time, if an employee has accrued paid time off (PTO) or sick leave that is eligible for payment, include it in this area.

If your firm provides COBRA or comparable health plans that extend coverage beyond the employment contract for health insurance and health-related benefits, you can explain such benefits here as well.

It’s also worth noting that many of these benefits, as well as information regarding them, are customary components of any termination letter.

With this in mind, you might want to create a custom section in a document template utilizing variables to quickly calculate and incorporate exact and relevant information.

#7. Describe the next steps as well as any disclaimers.

You may need to provide direction on what should happen next, depending on the circumstances of the termination.

Security may be standing by to remove an unhappy employee out of the building in the case of an abrupt, involuntary termination.

You may wish to give a schedule to enable employees finish out current contracts, hand over tasks to other team members, and exit with minimal team disruptions for terminations worked out over time.

Human resources may have a policy outlining the processes and procedures to be followed when establishing deadlines for departing employees, therefore examine current policies before developing this section.

#8. Finalize data and contact information

A corporation may need to contact an employee beyond their termination date.

This might occur when employees refuse to return business property or when the company wants to mail a final severance check, tax papers, or other similar communication.

Provide any important contact information (cell phone, home address, etc.) for your employee as part of the termination process and ask them to check that everything is correct before they leave.

This will allow the company to contact you if there are any unresolved difficulties.

At the same time, make sure to include information on who your worker should contact if any concerns arise.

Remember that standard employee hotlines may be inaccessible to former employees, and that local numbers may not be the best points of contact in the future.

What Is a Lease Termination Letter?

A lease termination letter, also known as an end-of-lease letter, is a notice sent by the landlord to the tenant informing them that the lease will not be renewed after the specified end date.

As the end of your lease term approaches, you and your renter will have the option of renewing for another term or terminating the lease arrangement. If you intend to terminate your lease with your renter, the typical means of notice is a lease termination letter.

What Do You Write In A Lease Termination Letter?

A typical lease termination letter will include:

  • The lease expiration date
  • The reason for dismissal (if applicable)
  • A duplicate of the lease
  • A request for the new address of the tenant (for forwarding the security deposit return)
  • Instructions for completing the move-out process
  • A duplicate of the move-in checklist (if applicable)
  • Dates and hours suggested for a final walkthrough inspection

What is the Format for a Lease Termination Letter?

A letter terminating a lease from a landlord should be written clearly and in accordance with local landlord-tenant and fair housing legislation. Before submitting a lease termination letter, consult with a local attorney.

#1 Begin by putting the date, your name, and contact information in the upper right-hand corner of the letter.

#2: Send the letter to your landlord (or tenants, if there are multiple people on the lease).

#3: Include the rental property address, lease start and finish dates, and the reason for the letter in the first paragraph.

#4: In the second paragraph, remind your tenant of the initial walkthrough that was conducted upon move in, and include a copy of the walkthrough.

#5: Next, notify the renter that you would like to conduct a final walkthrough before moving out. Offer a couple times that work for you and invite them to choose one. Verify with your local rules, since some locations need the renter to be present and the walkthrough must take place within a specific time frame.

#6: Obtain a forwarding address from the tenant for any future correspondence, such as returning the security deposit.

#7: Finish with a closing sentence and your signature.

When Should A Lease Termination Letter Be Given?

You must normally offer at least 30 days’ notice to a renter when terminating a month-to-month lease. However, depending on the conditions of the lease and local law, you may be obliged to deliver a 30-, 60-, or 90-day notice of termination of tenancy for a fixed-term lease. A landlord may also be unable to terminate a lease in particular cases. Read your lease agreement and speak with a local attorney to establish how much notice you need to give.

Writing A Contract Termination Letter

A contract termination letter is an official letter telling an employee that their job is being terminated. According to an employee’s contract, it often defines the cause for the turnover, describes the next steps this employee may take, and explains any perks or pay they may receive as a result. Staff workers, for example, may be eligible for severance pay if they have been in a job capacity for at least two years before. A termination letter can also be used to cease a legal relationship with another company and outline any final transactions between them.

When Do Employees Use Contract Termination Letters?

When specific events occur that result in the termination of an employee’s contract, a corporation can use this sort of letter. Companies can choose whether to issue this notification or just administer salaries in the time before a contract legally ends, according to the Employment Act. Sometimes both parties agree on the termination ahead of time, while in other circumstances, the dismissal is forced. According to the Contracts (Rights of Third Parties) Act, businesses can terminate a contract for a variety of reasons, and they may use a letter during the process to reaffirm the provisions of a contract’s termination clause.

These are some examples of when an employer might use this type of letter:

  • Probation time: Some employees may complete three to six months of provisional labor before becoming full-time employees, during which time management may terminate their job.
  • Employees can be terminated for breach of contract if they miss work for more than two days without notice or violate their contract in any way.
  • Employee misbehavior: An employer has the authority to terminate a staff member’s contract if their behavior breaches a company’s code of conduct or if they somehow misrepresent their workplace.
  • Retrenchment: When faced with external circumstances such as decreasing yearly income, a firm may terminate an employee’s contract, particularly that of its executives, in order to minimize expenses or restructure.

Why Is A Contract Termination Letter Important?

Consider the following arguments for the importance of this type of letter:

  • Maintaining a stellar reputation: Sending a termination notice can assist a company to improve its professional image because it is usually a courtesy rather than a legal requirement.
  • It serves as an official record: If a legal disagreement arises later, a written termination notification might be a valuable resource.
  • Aids an individual’s transition: Sending employees a termination letter can give them some time to look for a new job or deal with any external circumstances.
  • Maintains a company’s relationship: Expressing respect and gratitude through a letter of termination can increase the likelihood of a future relationship between two firms.

Termination Letter Template

The template below can assist you in organizing your thoughts and getting started in writing an employee termination letter:

Dear [name of employee],

I hate to tell you that your employment with [business name] has ended / will end on [termination date]. As previously indicated, we are terminating the employment relationship because [include a brief summary of your rationale].

You will no longer be entitled for compensation or benefits associated with this position as of [termination date]. Please return [list any corporate property that must be returned] to [name and address where materials can be dropped off or mailed] by [date of deadline].

You will be paid until [termination date — if applicable] and will be entitled to your accrued vacation days. You’ll also receive [amount and conditions, if applicable] in severance compensation.

Please be aware that you have agreed to a non-disclosure, non-solicitation, and non-compete agreement [where applicable]. You must immediately destroy any private information about our company that you have on your personal devices or hard copies.

If you have any questions, please contact me within [number] working days of your last day.

We wish you the best of luck in your future pursuits.

[Your signature and name]

While this sample can serve as a helpful guide while you create your own, it’s always a good idea to examine any termination letter with an employment law professional to ensure that your letter meets your aims while limiting your company’s legal risk.

Which is Better, Termination Or Resignation?

It is better for your reputation if you resign because it appears that the choice was made by you rather than your organization. But, if you leave voluntarily, you may not be entitled to the same form of unemployment compensation as if you were dismissed.

How Do You Respectfully Terminate An Employee?

  • Provide opportunities for improvement ahead of time.
  • Take HR as a witness.
  • Meet face to face.
  • Keep it simple, brief, and professional.
  • Give your team the news before the employee leaves the building.
  • Make plans for the future.

In Conclusion,

A termination letter informs an employee that he or she has been fired, outlines the next steps they must take, and describes the benefits or compensation they are entitled to. A pink slip, letter of termination, contract termination letter, letter of separation, and notice of termination of employment are all terms used to describe termination letters.

  1. LETTER OF TERMINATION: Definition, How to Write One and Samples
  2. HOW TO TERMINATE AN EMPLOYEE: Handling Termination of an Employee
  4. WHAT IS INVOLUNTARY TERMINATION? Impacts in the United States


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