How to Write an Employee Termination Letter | CAVU HCM

Employee termination, especially involuntary termination with or without cause, can be a stressful and unpleasant process for employers across industries. One way to reduce the difficulty of the termination process and to ensure full legal compliance is to craft an adaptable template letter for official termination. To do so, you’ll first need to understand which information is necessary to include in the letter to address sensitive HR and legal considerations while also adopting the right tone to notify an employee of dismissal.

In this article, we’ll offer an overview of the legal considerations you should keep in mind while crafting your employee termination letter template, including which information to include, how to document the employee termination internally, and establish clear notification timelines.

Lead-Up to the Official Letter

Excluding cases of gross misconduct, most employees should already have some sense that a termination is on the horizon, especially if you’ve already taken responsible disciplinary or probationary steps that have not yielded positive results for the employee or business.

In most cases, an official termination letter is the final step in a series of attempts to resolve or reverse a pattern of job performance issues. It’s wise for employers to show (and document/retain evidence) that they’ve taken every fair measure possible to help an employee improve their job performance and understand expectations well before the termination stage.

Legally speaking, employers are entitled to dismiss an employee for any of the following reasons:

• Regular job performance or job capability issues
• Misconduct that is unacceptable based on company policies
• Significant conflict(s) of interest or personality misalignment that negatively impacts business or workplace cohesion
• Redundancy
• A statutory breach that legally prevents an employee from continuing work (e.g. a lost license, qualification, evidence of criminal record)

Before you prepare an official employee termination letter, you should consult the employee’s manager or department head to agree upon a final date of employment. Once your letter is fully prepared, you can arrange a short meeting with the employee to share the news prior to providing an official termination letter (formal written notification of the decision). Bear in mind, there is no legal requirement that the employee signs the termination letter. Any termination letter you share with a departing employee should be duplicated/archived for your HR department and legal team in the event that it needs to be referenced for legal purposes in the future. 

What to Include in the Employee Termination Letter & Legal Considerations

Although there are no federal laws that require employers to share an official letter of termination with a dismissed employee, most employers still offer one, including if local or state laws require it, or if it is required as part of a larger layoff or furlough decision where certain regulations apply.

Your official employee termination letter should include all of the following information:

• Employee name, department, role within the company, and ID#
• Manager or supervisor responsible for completing the termination
• Effective date of termination and reason(s) for dismissal
• An explanation of compensation or severance to which the employee is entitled; a separate severance agreement should be established in advance of providing the letter
• A clear explanation of what will happen with employee benefits following termination and contacts/resources when applicable (including an HR representative)
• A list of any company property that must be returned to a manager or department
• A reminder of any active non-disclosure agreements (NDAs), non-compete clauses, or restraint of trade agreements that apply to the terminated employee

We advise employers to have their legal counsel or a trusted HR consultant review any employee termination letter before sending it to an employee. In terms of tone, employers should strive for a balance of professionalism and sensitivity, recognizing that although the job termination may be necessary and unavoidable, staying civil and humane in delivering the news to an employee increases the likelihood of parting on good (or at least reasonable) terms and mitigates the risk of an employee lawsuit.

Notice Period

As we explored earlier, employers are not strictly required to provide an official notice of termination except if the employee is part of a union agreement or under a contract that dictates the terms of the employer-employee relationship. Nevertheless, local, county, or state labor laws vary considerably and could impact some of the specifics of your termination letter, so be sure to speak to a qualified HR consultant to ensure your business’ actions are legally compliant.

Large employers, including those in manufacturing, should also keep in mind that the Worker Adjustment and Retraining Notification Act (WARN) mandates that employers with 100 or more employees in their workforce must offer at least 60 days advance notice if a plant closure or large-scale layoff is forthcoming.

Employee Termination Letter Template

To support your business’ process of creating an official employee termination letter, we’ve created a termination letter template to get you started. This template can be modified to align with the specific circumstances that apply to your business, allowing for adjustments to employee position, timeline, contact information, details regarding involuntary termination vs. furlough, etc.).

Optimize Workforce Management and Payroll with CAVU HCM

Terminating an employee is only half of the process. After dealing with the human resources side, employers must also ensure that their payroll is up-to-date to reflect recent personnel changes. The frequency of employee termination can also be reduced with improved talent management – optimizing HCM with better hiring practices, productivity-minded onboarding, and improved performance evaluation.

Ready to improve your talent management processes to hire and retain top talent for your business? Contact us today to let us know how we can support you.