Well, this is awkward.
Nobody wants to terminate an employee.
However, sometimes things just don’t work out and an employee needs to hit the road. When that happens, as an employer, it is very important to get all of your ducks in a row.
In this case, you will want to provide a termination letter to the employee. While you will likely terminate the employee in a meeting, you will still want a termination letter in order to document the event, the next steps and the employee’s knowledge.
Use these guidelines and termination letter sample to write a clear and communicative letter.
Do not wait until you are firing your first employee to put a termination letter together. Especially in a smaller company, you will not want to write a termination letter while emotional or under duress. This is, after all, not a letter in which to list your grievances with the employee in question. Rather, it is an opportunity to clearly layout the next steps.
Take the time to put together form letters like the termination letter or rejection letter to have on file for when needed.
Statement and Date Effective
This is fairly straightforward. Actually, you should regard the termination letter as a straightforward, communicative letter.
Here, you will state that the candidate to whom the letter is addressed has been terminated. In addition, you will use this section to declare the date the termination will become effective.
Is the termination immediate? Will the employee be expected to stick around for two weeks? Will the employee be asked to train their successor? Lay this all out in 2-3 sentences at the start of the letter.
Declaration of Severance (If Any)
Here, inform the employee of any severance package that may be forthcoming. Is there a commensurate severance for longevity at the company? Is there a basic severance package you give to every employee?
If you do not offer a severance package, you may skip over this section.
Many companies opt to pay the severance in one check. This ends the relationship quickly, upon the signing of the termination letter.
Unclaimed Benefits / COBRA
If the employee has any outstanding benefits with the company, lay out what will happen with them. If the employee has accrued PTO, let him know that may be expected in his final paycheck.
Notify the employee of what will happen to his health insurance upon the date of effective termination. Will there be a separate letter outlining health benefits? Should the employee expect more information about COBRA continuation of coverage?
It is important to be clear about what an employee can expect in terms of health coverage once termination is effective. Use this section to set those expectations.
Collection of Company Material
Does your newly-appointed employee have a badge that gains entry to the office? Does she have a company credit card that needs to be relinquished?
Think seriously about what company materials an employee might have physical (or digital!) access to and lay out the next steps for returning these properties. It is especially important to protect digital and data properties in the event of a harried termination.
Other Documents to Sign
If you have good systems in place, then the chances are that your offer letter laid out pretty clear terms in the event of a termination. If it did not, you may want to enlist some legal aide to make sure everything goes smoothly in the event of a termination.
There are some auxiliary documents that may need to be signed by the terminated employee, aside from the termination letter. Is an NDA necessary in this case? Will the employee need to sign a document agreeing to the termination?
Before holding a termination meeting with the employee, print copies of whatever agreements you will need to be signed.
Use this section to communicate what other documents an employee will be expected to sign.
Simply use the sign off to wish the employee well. If the termination is on good terms, you may even include a sentence inviting the employee to cite you as a good reference in the future.
Full Sample Termination Letter
This letter is to confirm our discussion today, [date], in which we informed you that your employment with [company] is terminated, effective immediately.
Along with your next and final paycheck, you will also receive your accrued PTO. You will receive a severance of [amount over period of time]. You may provide a mailing address for your final check or arrange a time to pick it up from Human Resources. You may also speak with [HR Manager] about the transfer of your 401K and other benefits.
Your health care benefits will remain effective for 180 days after termination date.
As agreed, you will relinquish your company card, ID card and company laptop. Please review the non-disclosure agreement you signed upon hiring. This lays out the company policies of privacy in regard to [Company’s] trade secrets, methods of operation and other confidential information.
I would be happy to provide you with a good recommendation in the future. We wish you luck in future endeavors.
You might notice that we did not include a section citing the reason(s) for termination.
While doing so is up to your discretion, it is more common to lay out the steps for going forward rather than dwelling on the reasons for termination.
If the employee has questions about the reasons for termination, that can be discussed either within the termination meeting, in a separate meeting with HR or in an exit interview.
In short, keep your termination letter clear and decisive. Doing so will ensure a smoother termination process.