Things to keep in mind when writing an employee termination letter

Letting an employee go usually isn’t a pleasant experience. In fact, it can be an emotional and overwhelming task for many business owners and managers,  regardless of the reason for firing someone.

Despite the difficulty — or maybe because of it — it’s important to handle a termination with professionalism, with tact, and by the book. That’s why having a termination letter is key. It states, in writing, the terms of the dismissal so none of the parties involved are confused.

Wondering how to write a termination letter? In this article, we’ll explain what a termination letter is, why you may need one, and how to write one that’s clear and professional.

When to use a termination letter and what’s usually included

A termination letter is a document an employer writes to notify an employee of their firing. Employers most often use these letters in situations where there has been employee misconduct, but they can also use them when they’re laying off an employee.

(Note: A letter from an employee informing an employer of the employee’s intent to leave the company is called a resignation letter.)

Termination letters often contain the following information:

• Employee name
• The reason for the employee’s termination
• The effective date of the termination
• Reminders regarding any nondisclosure agreement or noncompete clause the employee signed when they started with the company

“A termination letter is your opportunity as an employer to explain the reasons for the dismissal, citing, for example, the ways in which the employee was in breach of contract,” says Richard J. Brandenstein, attorney and partner at FBR Law, a firm specializing in workers’ compensation and social security disability. 

Why termination letters are important

Many terminations take place in person during a meeting between the employer and employee, so why do you also need a termination letter? This document is important because it provides clarity.

“Speaking from experience, terminating someone’s employment is never a pleasant experience, for either the employer or the employee. In these unpleasant circumstances, it’s not uncommon for employees to wonder why exactly they were relieved of their duties, and in some cases they may suspect that they have a legal case against their ex-employer for unfair dismissal,” says Brandenstein.

“This is where termination of employment letters come in — they serve as an important legal protection for employers in the event of future legal action.”

“Firing an employee is a decision not without risk,” says Robert C. Bird, professor of business law at the University of Connecticut School of Business. “Termination letters are important because they set the terms and conditions of an employee separation. Discharging an employee in writing is generally better than simply telling an employee that she or he is fired because it concretizes the reasons for discharge and reduces disagreement over the reasons for doing so.”

The termination letter also provides evidence to a third party that the employer has taken the right steps when terminating the employee, acted in a legal and fair way, and shared clear information on what happens next. 

When termination letters are useful

Employers most commonly use termination letters when an employee hasn’t met company expectations or has violated company policy.

For example, if a salesperson has missed performance targets for the last two quarters, has received multiple warnings, and hasn’t improved their performance, the company may terminate them.

Similarly, if an employee has harassed other employees, stolen company property, or been late to every shift, the employer may choose to fire them.

Another scenario that might require termination letters is layoffs. These usually occur when a company is experiencing difficult or transitional financial periods and needs to cut costs. 

For some industries, like construction, layoffs happen seasonally, and workers may expect them. 

“There are several different reasons that an employer may decide to terminate the employment of an employee, and, as such, should issue a termination letter,” says Brandenstein.

Some things to keep in mind when writing a termination letter

While termination letters may sound pretty straightforward, they can be difficult to write. You should present all the necessary details in a manner that strikes the right tone for the situation. The letter also has to be easy to understand to avoid causing confusion.

Follow these best practices for writing a thorough and effective termination letter:

• Understand the legal requirements for your state. Different states have different legal requirements when it comes to termination, so familiarize yourself with the laws of your state and know your obligations as an employer.
• Use the right tone. “While adopting a more casual tone in a termination letter might appeal in order to ‘soften the blow,’ language that implies any kind of familiarity or personal connection to the dismissed employee should be avoided at all costs,” says Brandenstein. “Even if you liked the employee personally, it’s important for the termination letter to adopt a formal, professional tone. This is an official document, after all.”
• Minimize confusion and questions. The termination letter should contain helpful information the employee will need to know to close the loop on their employment. Before you start writing, gather all the necessary details, such as the termination date, official reason for termination, health benefits, termination processes, and the like.
• Treat everyone fairly. “Any termination of an employee should be consistent with company policy, and the decision to terminate an employee should be backed by clear and objective reasoning,” says Bird. “A manager should not treat one similarly situated worker more harshly than the other, as that may create the conditions for a claim of illegal discrimination.”
• Pay attention to the date. In many cases, the official date of the termination is the same day the employee receives the letter. In essence, they are to leave right away. However, in some cases, such as during a planned layoff, the official date of the termination may be several weeks or months after they receive the termination letter. In this case, the letter may specify that the employee is to conduct business as usual until their official date of termination.
• Offer contact information. While the termination letter should cover all important details, provide contact information for a specific person within the company who the former employee should reach out to with questions or to clarify next steps.

How to make the termination letter process a little easier 

Now that you know why termination letters are so important and what the best practices are for writing one, it’s time to get started.

If you’re feeling overwhelmed and don’t know where to begin, why not use a Jotform template to get a head start? We have templates for contract termination letters and employee termination letters you can customize to fit your needs. You can also use the employee termination checklist to create a polished document that outlines the important information required for a streamlined exit process.

Photo by Christina Morillo