Termination Letter: What is it and How Do I Write One?
Making a decision to terminate an employee is stressful for all parties involved, but as an employer, it's a necessary part of business. Find out what you need to know about writing termination letters.
If you're considering terminating an employee, it's imperative that you document the event with a written record: a termination letter.
What is a Termination Letter?
A termination letter confirms the individual's end of employment and outlines the necessary information the person needs to know to move forward. This document will serve as an official record for the layoff or firing, in case the employee files for unemployment, applies for another position within your company or files for a lawsuit for wrongful termination.
Before sending any termination letter, employers should meet with the employee face-to-face to discuss the termination. It will make the process easier and the employee won't feel blindsided about being let go.
What Should Be Included in a Termination Letter?
- Basic Employee Information: Full name, employee ID, job title, company name, who is handling the termination, the date the termination letter is being written, and the termination date.
- Reason for Termination: It's best to provide a reason why an employee is being let go. For example, the company may be going through a staff reduction, the employee might be consistently late for work, or the company phased out the employee's position. Including the termination reason will serve as a record and help the employee understand why they are being laid off or fired—key to compliance. If the employee is being terminated for cause, be sure to include any warnings given to the employee, the warning dates, and if they were verbal or written.
- Company Property: If the employee has company property in their possession– company laptop, keycard, etc.– make a note and give a specific date for return.
- PTO: If the employee had any unused vacation, sick, or PTO days, include whether or not they will be paid out for their unused time. Check your local laws: Some states require employers to pay out unused time.
- Final Paycheck: Include when their final paycheck will be issued and if this amount will be mailed or needs to be picked up.
- Benefits: Include when the employee's benefits expire and how they can use COBRA to continue coverage through the group plan. If you offer a 401(k) or other type of retirement plan, provide information to access their savings.
Is HR Required to Write a Termination Letter?
There are no federal laws that require employers to provide termination letters. However, some states require written notice of separation, including Arizona, California, Connecticut, Georgia, Illinois, Louisiana, Massachusetts, Michigan, New Jersey, New York, and Tennessee.
Likewise, there are no federal laws that require businesses to provide a reason for termination. With this in mind, if an organization terminates due to cause, it's wise to document the reasons supporting the decision. This can help guard your company in case of a lawsuit.
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