Employee Termination Letter: Complete Guide (Templates & Examples)

A termination letter is a communication to the employee regarding the end of the employment term. It is a difficult and particularly sensitive topic. After all, it is not easy to tell a person about the termination of the employment letter. However, the needful has to be done when the time arises, and a termination letter, with all the requisite details intact, serves the purpose legally and ethically. It is also known as the pink slip, end of employment letter, job separation letter, or a dismissal letter.

An appropriate termination letter should consist of the next steps that the terminated employee should take, along with the compensation and benefits that they are owed.

So, how do you write a termination letter? Find out that and more in this complete guide.

But before we begin, let’s quickly understand the different types of employee termination, as it has an impact on how you write the end of employment letter.

What are the different types of employee terminations?

There are three types of employee terminations – voluntary, involuntary and at-will. Knowing the difference between the three can help you set up the right termination form, create a termination of employment template, and put it to use when the time is right.

1. Voluntary employee termination

A voluntary termination of an employee occurs when the said employee severs the working relationship. In this scenario, the employee can take a formal approach with a letter of resignation and serve a notice period stipulated in their employment contract. Sometimes, they can quit the job verbally, without notice as well. The specifics depend on the employee termination clause you included in the job offer or the contract you signed with them.

2. Involuntary employee termination

Unlike voluntary termination, here the business decides to sever the employment relationship. But there are 2 types of involuntary employee terminations that happen – with cause and without cause.

With cause: This is when an employee is terminated for a specific reason such as violation of company policy, failing to perform in their role, having a track record of reaching late to work, unapproved absenteeism or are simply disrupting the workplace environment and culture. But typically, in this case, the employee is first warned of their behaviour before being handed over a letter of employee termination.
Without cause: This usually includes layoffs, ending employee relations when downsizing or perhaps the employee isn’t a great fit in the company culture or not performing. In this case, employees are removed from the payroll either due to market conditions or change in business status and imperatives.

Typically the employee is entitled to unemployment insurance in case of a termination without cause but that may not be the case if they terminated for cause.

3. At-will employee termination

This is one of the most common types of employee terminations. It refers to the scenario when the employee and the business they’re associated with, are free to terminate employment at any time, with or without a notice period and without a specific reason or warning. So an employee can leave without serving a notice period or filling up the employee termination form. At the same time, the employer can terminate the employment without giving a reason or being asked to pay a compensation amount. At-will employment is the most common type of employment in the US.

Termination letter: The correct language to pen it

Although there is never a good way to fire an employee, following best practices and regulations help retain relationships. For instance, it is never a good practice to verbally fire an employee, unless some exceptional circumstances or breach of ethics take place. That being said, even that should be followed with written notice in the form of a termination letter.

Writing a termination letter can be tricky. Nevertheless, you should keep a few things in mind, especially with regard to its language. Remember that whatever you are putting in the termination letter is legally binding and can be used as evidence, in case of any proceedings that may follow.

Hence, the most important thing to remember while writing an end of employment letter is that you should state the facts in the most direct way possible. Also, the circumstances of termination should be mentioned clearly and backed by evidence. In case the termination was preceded by ethical breaches, the organizational policies that were violated need to be mentioned.

Take, for instance, the following example.

The organization has conducted an investigation with regard to the events that transpired on June 20, 2020. It was found that your action in the form of derogatory remarks towards another employee was contradictory to the company’s anti-discriminatory policies. Despite warnings and further training, you still repeated the same on July 1, 2020. We thus have to end your employment with us.

This part of a sample termination letter to the employee is factual and focused. This is exactly how the whole letter should be fashioned.

4 things to do before writing an employee termination letter

Writing an employee termination letter is a quick feat if you are careful enough. However, there are a few things to keep in mind before you start writing it. Let’s take a look at those.

1. Get a legal consultation

Consult with your legal team and figure out whether you can terminate the employee at the said point of time. This is necessary to avoid any legal mess later on. Many times, the employment letter may state certain conditions which may make it difficult for the organization to terminate a certain employee. Consult with your lawyer and clear out every aspect related to the said employee’s employment and the end of it.

It’s important to know more about the clauses associated with the termination of an employee. For example, here’s what you should know about involuntary termination of employment in the United States.

2. Talk to the manager of the employee

You cannot pick a person out of a team and simply terminate employment. The team would be affected, thereby affecting the organization. The best discourse would be to first have a chat with the manager and figure out the way further. The manager can further plan out how to get the said employee’s pending assignments done.

3. Talk to the employee

Yes, this is an important part too. No employee should be put in a position that he or she does not see the termination coming. There should be a verbal, face-to-face discussion regarding employment. Sometimes, this discussion leads to an improvement in the situation, thus nullifying the need for termination. If not, the job termination can proceed on amicable terms.

4. Get a termination letter template in place

Unlike other mails, employee termination letter or a job severance letter is supposed to be curt, courteous, and factual. There is no need for any personal customization here. Thus, it’s better to have a termination of employment letter template ready with you. You can refer to the samples we have created for you, later in this guide.

It is important to get the aforementioned done and out of the way before you get down to the actual business of writing a termination letter. Apart from this, it is also imperative to know what should be a part of the employee termination letter and what should not.

6 things that should be included in an employee termination letter

1. Employee information

This should comprise all the organizational information that is relevant to the said employee, such as employee ID, position, department, and the reporting manager. This is particularly important as a record for future purposes.

2. Relevant dates

Keep a record of all the relevant dates. This refers to not only the date of employee’s termination and notice period but also dates of the events which led to the termination.

3. Reason for termination

It is important to have written records for all the events that led to the termination. Even if it is the minutest of detail, it needs to be recorded. Again, this will serve as a written record of why the termination took place.

4. Company property recovery

This is an extremely important thing that needs to be mentioned clearly in the termination email or termination letter or both. It needs to be physically verified as well.

5. Compensation information

The termination letter should contain information about the full and final settlement that is due to the employee. It includes his salary, monetized paid leaves, severance compensation if any, and the likes. The termination letter should also mention the date when the employee can expect the payment to be cleared.

6. Legal agreements

Depending on the organization’s policies, all the legal agreements such as NDAs (Non-disclosure agreements) or NCAs (Non-compete clause).

3 things that should not form a part of a job termination letter

1. Do not use casual familiar or casual language

It is absolutely essential to use the correct language while penning a severance letter or an end of employment letter. There should be no use of casual or familiar language to indicate any personal connection. Phrases such as ‘Now you can spend more time with your family’ or ‘You can look on the brighter side of things’ are perfect examples to avoid. You have to understand that there is nothing soothing about termination. The best way would be to keep it factual and to the point.

2. Do not refer to past mistakes in the employee termination letter

Cite only and only those mistakes and circumstances which have led to the termination at the end of employment letter. In no way is it ethical to bring up past mistakes which have got nothing to do with the termination. Additionally, this can go against the organization if the letter is presented as evidence in the court of law, lest the case of termination becomes a legal battle. Be to the point.

3. Do not disclose any protected characteristics for termination

Protected characteristics refer to extremely personal traits such as gender affiliation. These shouldn’t be considered a basis for terminating or employing someone. There should be no reason to disclose these without consent in the termination letter.

An employee termination letter is best when it is to the point and sticks to the facts in hand. There should not be any excess information.

How to structure and write a job termination letter

Now that we are sure of the language to be used in a job termination letter or employee termination letter, along with what to include and what to exclude, let’s move on and figure out how to actually structure the letter.

Following are the typical elements of a termination letter and should be included at all costs:

1. Address of the sender

This means including the name and address of the organization in clear font and format. Also include the date and place of writing.

2. Address of the recipient

This refers to the employee. Include the full name and contact details of the employee in question.

3. Opening paragraph

The opening address is the only part which can be familiar to break the ice. The rest of the letter should only be backed by facts. For instance, you can use the salutation of ‘Dear X’ while addressing the employee. Thereafter, get to business and state that this is an employment separation letter or an employee termination letter. Include when the termination would come into effect, i.e. immediately or on a certain date.

4. Body of the letter

This should ideally include the details of compensation which is due to the employee in the form of pending salary and benefits that have not been availed to date.

5. Closing paragraph

This includes the details of any company property in the possession of the employee and the rules of its recovery.

6. Letter ending

You can end the letter on a cordial note asking the employee to get in touch, in case of any query or confusion.

7. Name and signature

Leave space for respective signatures. Usually, it requires the signature of the HR, the manager, and the employee.

A good termination letter that has been created keeping in mind the aforementioned components should not impose any complications in the future, legally or otherwise.

5 Things to keep in mind while terminating an employee or before sending a termination of employment letter

Firing an employee can be a traumatic experience for all the parties involved. Thus, it is important to keep certain safe practices in mind to make it a little easier.

1. Ensure you started by warning the employee

In no case serve a termination letter before warning the employee. Assess the employee’s performance and figure out if there is any room for improvement. Try to gauge the reason behind an act or lack of it. Communication is important. Termination should be the last resort and not the first thought.

2. Make sure you have a witness to validate your termination reason

It is always a good practice to have a witness while speaking to the concerned employee. It is just a precaution rather than a matter of mistrust as many may misconstrue it to be. The best practice would be to include the manager of the department. This will also help create a complete picture. It can also result in an alternative ending wherein a better work plan is charted out and there is scope for improvement.

3. Focus on conveying the employee termination well

Before having ‘the talk’ with the employee, be firm on whether you are having a final conversation or there is scope for second thoughts. No employee believes in the finality of termination until it is served in the written word. Thus, it is important to be sure first. If the decision is final, convey the same. If it is a warning which can be followed by termination, convey that.

4. Allow a dignified and private exit

This is the least that can be done, and unfortunately not followed by many workplaces. Termination is a difficult process, especially for the employee. Make sure you allow the person a time when the desk can be cleared, instead of work hours when it becomes a humiliating affair.

5. Don’t sever human relations while bidding goodbye

Always end the employment on a good note. You are bidding goodbye to the employee and not the person. In no way should the meetings and the subsequent termination letter be a testimony to systemic humiliation or a blow to employee’s self-esteem. Help the person in job search, if possible, and make the termination process as quick and easy as possible. Use words of encouragement and boost them towards a better future. End the meeting and the employment on a better note, if not a high one.

Employee termination is by no means an easy process. However, it can and should be a humane one.

Termination letter examples that you can use

Now is the time to know about the termination of employment letter template. Let’s take a look at some termination letter examples.

Termination letter sample stating the next steps

Dear XYZ,

This is to inform you that your employment with company ABC is terminated with effect from [date]. As discussed, this is the best course of action with cognisance to the matter in hand [mention the reason].

You are entitled to receiving your salary until [date]. Your benefits would be duly calculated and would form a part of your full and final settlement, which will be credited to your registered bank account on or before [date].

Please note that you are bound by the non-disclosure and non-compete agreements signed at the time of entering the company’s employment. The same shall legally binding and any contradiction of the same would lead to legal consequences.

In case of any queries, please connect with me on [email id].

We wish you the best for your future endeavours.

[Name and signature]

Termination letter sample laying down the closure requirements

Mr. XYZ,

This is to bring to your notice that your employment with company ABC ends as of [date]. This decision is irrevocable and final.

You will be receiving your final paycheck as a part of your full and final payment. This will include the salary of your last month served, along with untapped benefits. You are also entitled to a severance benefit of [amount], given the suddenness of the situation.

You are requested to submit all the company property with immediate effect. This includes the company’s laptop and swipe card.

Please review the confidentiality agreement signed by you at the start of the employment, which is attached to the email. Any breach of the same will end in legal consequences.

You can reach me at [contact] for any queries.

Thanks,