Letting someone go is never easy. Whether it's due to poor performance, misconduct, or a change in business needs, crafting that dreaded termination letter can feel like navigating a minefield in oversized combat boots. You want your termination letter template to be direct but not harsh, informative but not long-winded.
Most of all, you want to handle the situation with grace and minimize legal risks. That's where a solid termination letter template comes in. It's your roadmap for communicating the necessary information clearly and professionally.
But a truly effective letter goes beyond just filling in the blanks. It's about striking the right tone, providing the necessary details, and treating the employee with respect, even in a difficult situation.
What Is a Termination Letter?
A termination letter, also known as an employee termination letter or employment termination letter, is a formal document that notifies an employee of the end of their employment with a company. It's a critical part of the offboarding process and serves as a written record of the termination.
The letter typically includes key details such as the reason for the termination, the effective date, and any relevant company policies or legal agreements. It also outlines the employee's rights and responsibilities, such as the return of company property and confidentiality obligations.
70% of employees who experience respectful terminations are more likely to speak positively about their former employer and 60% of HR professionals believe that a well-crafted termination letter can reduce the risk of legal issues. By planning in advance, you can make a difficult process such easier.
Key aspects of an employee termination letter
When drafting a termination letter, it's crucial to include all the necessary information while maintaining a professional and respectful tone. Some key aspects to cover are:
- The employee's name and position
- The termination date and reason
- Details about final pay and benefits
- Instructions for returning company assets
- Reminders about confidentiality and non-compete agreements
It's also a good idea to thank the employee for their service and wish them well in their future endeavors, even if the termination is due to performance issues or misconduct.
Reasons for Employee Termination
There are various reasons why an employer might choose to terminate an employee. Some of the most common include poor performance, misconduct, layoffs due to financial difficulties, or the end of a contract. Let's take a closer look at a few of these scenarios.
Termination for cause
Termination for cause refers to the dismissal of an employee due to their own actions or behavior. This could be things like:
- Consistently poor performance
- No call no show too many times
- Violation of company policies
- Harassment
- Or insubordination.
In these cases, the termination letter should clearly outline the specific reasons for the dismissal and any previous warnings or disciplinary actions taken. It's important to have thorough documentation to support the decision and protect the company from potential legal issues.
It’s crucial to formally document poor performance when it occurs. At Numeric.io, the team manages feedback in their HR system, Rippling, and they enter feedback at least every six months. If there are performance concerns, managers input feedback more often. When managers schedule one-on-one meetings with employees whose performance isn’t up to par, experts suggest that managers put performance on the meeting agenda, so it’s documented when and how you brought up the topic.
-Kylie Ora Lobell for SHRM
Here's a quick guide to how to properly terminate for performance issues:
- You need documentation of the poor performance.
- You should have had multiple conversations with the employee.
- The manager should be delivering the message.
- You should present the documentation to the employee, provide the necessary paperwork, and wrap it up.
- Don't allow the employee to beg or argue for their job.
- -Suzanne Lucas, HR Consultant
Termination due to layoffs or downsizing
Sometimes, terminations occur due to factors outside an individual employee's control. Economic downturns, company restructuring, or changes in business needs can lead to layoffs or downsizing.
When this happens, the termination letter should explain the situation and reassure the employee that the decision is not a reflection of their performance. It's also a good idea to provide information about any severance packages or outplacement services being offered.
Termination of business contract
For employees on fixed-term contracts, the termination may simply coincide with the end date of their agreement. However, it's still important to provide an official termination letter.
The letter should reference the original contract and confirm that the employment relationship is ending as scheduled. It's also an opportunity to thank the employee for their contributions and provide any necessary offboarding instructions.
How to Write a Termination Letter
Writing a termination letter can be a daunting task, but it's an important one. The document serves as an official record of the dismissal and helps to protect both the employer and the employee. Here are some key things to keep in mind as you draft the letter.
Important aspects to note while creating a letter of termination
First and foremost, the letter should be clear and concise. Stick to the facts and avoid using emotional language or making personal attacks. It's also crucial to be specific about the reason for the termination, whether it's due to performance issues, misconduct, or layoffs.
Another important aspect is to include all the necessary details, such as the employee's name and position, the termination date, and any relevant company policies or legal agreements. Don't forget to outline the next steps, like the return of company property and the distribution of final pay and benefits.
4 Employee Termination Letter Template Samples
Drafting a termination letter from scratch can be time-consuming and stressful, especially if you're not sure what to include. That's where a termination letter template can come in handy. By following a pre-written structure and customizing it to your specific situation, you can ensure that your letter is comprehensive and professional.
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Basic termination letter to an employee without cause
Here's a basic template for a termination letter when the dismissal is not due to the employee's actions or performance:
Dear [Employee Name],
I regret to inform you that your employment with [Company Name] will be terminated effective [Date]. This decision is not a reflection of your performance, but rather due to [Reason, e.g., company restructuring, financial constraints].
Your final paycheck, including [Details about severance, benefits, unused vacation time], will be issued on [Date]. Please return all company property, including [List items], to [Name] by [Date].
We appreciate your contributions to the company and wish you the best in your future endeavors.
Sincerely,
[Your Name]
[Title]
I regret to inform you that your employment with [Company Name] will be terminated effective [Date]. This decision is not a reflection of your performance, but rather due to [Reason, e.g., company restructuring, financial constraints].
Your final paycheck, including [Details about severance, benefits, unused vacation time], will be issued on [Date]. Please return all company property, including [List items], to [Name] by [Date].
We appreciate your contributions to the company and wish you the best in your future endeavors.
Sincerely,
[Your Name]
[Title]
Sample termination letter without cause (staff reduction)
If the termination is part of a larger layoff or staff reduction, you might use a template like this:
Dear [Employee Name],
Due to [Reason for staff reduction], we unfortunately must terminate your employment with [Company Name] effective [Date]. This decision is not related to your job performance, but rather a necessary step for the company's financial stability.
You will receive [Details about severance, benefits] as outlined in our company policy. Your final paycheck will be issued on [Date] and will include [Details about unused vacation time, outstanding expenses].
Please return your [List company property] to [Name] by [Date]. If you have any questions, please contact [HR representative] at [Contact information].
Thank you for your understanding and your service to [Company Name].
Best regards,
[Your Name]
[Title]
Due to [Reason for staff reduction], we unfortunately must terminate your employment with [Company Name] effective [Date]. This decision is not related to your job performance, but rather a necessary step for the company's financial stability.
You will receive [Details about severance, benefits] as outlined in our company policy. Your final paycheck will be issued on [Date] and will include [Details about unused vacation time, outstanding expenses].
Please return your [List company property] to [Name] by [Date]. If you have any questions, please contact [HR representative] at [Contact information].
Thank you for your understanding and your service to [Company Name].
Best regards,
[Your Name]
[Title]
Sample termination letter for cause (attendance)
When terminating an employee for cause, it's important to be specific about the reason and any prior warnings. Here's an example of a termination letter for attendance issues:
Dear [Employee Name],
As discussed in our meeting on [Date], your employment with [Company Name] is being terminated effective immediately due to excessive absenteeism. This decision was made after [Number] written warnings and multiple meetings to discuss the impact of your absences on the team and the company.
Your final paycheck will be issued on [Date] and will include [Details about unused vacation time, outstanding expenses]. Please return your [List company property] to [Name] by [Date].
If you have any questions or concerns, please contact [HR representative] at [Contact information].
Sincerely,
[Your Name]
[Title]
As discussed in our meeting on [Date], your employment with [Company Name] is being terminated effective immediately due to excessive absenteeism. This decision was made after [Number] written warnings and multiple meetings to discuss the impact of your absences on the team and the company.
Your final paycheck will be issued on [Date] and will include [Details about unused vacation time, outstanding expenses]. Please return your [List company property] to [Name] by [Date].
If you have any questions or concerns, please contact [HR representative] at [Contact information].
Sincerely,
[Your Name]
[Title]
Sample letter of termination of employment due to poor performance
Poor performance is another common reason for termination. In this case, the letter should reference previous performance reviews and improvement plans:
Dear [Employee Name],
Following our discussions on [Dates] regarding your performance and the performance improvement plan put in place on [Date], we have decided to terminate your employment with [Company Name] effective [Date]. We have not seen the necessary improvement in [Areas of underperformance] as outlined in the plan.
Your final paycheck, including [Details about severance, benefits, unused vacation time], will be issued on [Date]. Please return all company property, including [List items], to [Name] by [Date].
We wish you success in your future endeavors.
Regards,
[Your Name]
[Title]
Following our discussions on [Dates] regarding your performance and the performance improvement plan put in place on [Date], we have decided to terminate your employment with [Company Name] effective [Date]. We have not seen the necessary improvement in [Areas of underperformance] as outlined in the plan.
Your final paycheck, including [Details about severance, benefits, unused vacation time], will be issued on [Date]. Please return all company property, including [List items], to [Name] by [Date].
We wish you success in your future endeavors.
Regards,
[Your Name]
[Title]
Remember, these templates are just a starting point. Always consult with your HR department and legal counsel to ensure your termination letter complies with company policies and applicable laws.
Offboarding Process After Termination
The termination letter is just one part of the employee offboarding process. After the decision has been communicated, there are several important steps to take to ensure a smooth transition for both the departing employee and the company.
Retrieve company assets and access
One of the first priorities is to retrieve any company property that the employee has in their possession. This might include:
- Laptops, phones, or other devices
- Keys or access cards
- Company credit cards
- Uniforms or branded apparel
- Confidential documents or files
It's a good idea to have a checklist of items to collect and to set a clear deadline for their return. This helps to protect company assets and intellectual property.
In addition to physical property, it's important to revoke the employee's access to company systems, networks, and accounts. This might involve changing passwords, deactivating user profiles, and updating permissions.
Conduct exit interviews and surveys
Another key part of the offboarding process is conducting exit interviews or surveys. These provide an opportunity for the departing employee to give feedback about their experience with the company and for the employer to gather insights into areas for improvement.
Exit interviews can be conducted in person, over the phone, or through a written survey. Some topics to cover might include:
- Reasons for leaving
- Perceptions of management and leadership
- Thoughts on company culture and work environment
- Opportunities for growth and development
- Suggestions for improvement
The information gathered from exit interviews can be valuable for identifying trends, addressing issues, and enhancing the overall employee experience.
Farewell plans
Finally, it's important to consider how to handle the employee's departure in terms of communication and farewell. Depending on the circumstances of the termination and the employee's role, you may want to:
- Announce the departure to relevant teams or the entire company
- Provide a clear plan for transitioning the employee's responsibilities
- Arrange for knowledge transfer sessions
- Organize a farewell event or gift
The goal is to handle the situation professionally and respectfully while minimizing disruption to the business. A well-planned offboarding process can help to maintain morale and productivity among the remaining team members.
Employee Benefits and Final Pay
When an employee is terminated, there are important considerations around their final pay and benefits. The termination letter should outline what the employee can expect in terms of compensation and the continuation or termination of their benefits.
Severance packages
In some cases, particularly for layoffs or terminations without cause, the company may offer a severance package. This typically includes a lump sum payment based on the employee's length of service and salary.
The specifics of severance are often outlined in the employee's contract or the company's policies. The termination letter should clearly state the amount of severance being offered and how it will be paid out.
It's important to note that severance is not always required by law, but it can help to ease the transition for the departing employee and reduce the risk of legal issues.
Employee insurance benefits
Another key consideration is the employee's insurance benefits, such as health, dental, and life insurance. The termination letter should specify:
- When the employee's coverage will end
- Any options for continuing coverage, such as through COBRA
- How to enroll in continuation coverage
- Costs associated with maintaining benefits
It's crucial to provide accurate and timely information about benefits to help the employee make informed decisions and avoid gaps in coverage.
Sample termination letter of employee benefits
A good termination letter template closes out the important details for the employee about what this means for their benefits, too. This can reduce confusion and follow-up emails or calls from the terminated employee. If you do get follow up questions, answer those emails professionally, too.
Here's an example of how the benefits section of a termination letter might look:
Your current health, dental, and vision insurance coverage will remain active through the end of [Month]. After that date, you will be eligible to continue your coverage under COBRA. Enrollment information will be sent to you by our COBRA administrator within 14 days of your termination date.
If you have a Health Savings Account (HSA), you will retain ownership of the account after your termination. [Company Name] will pay the monthly maintenance fees for your HSA through [Date], after which you will be responsible for any fees associated with the account.
Your company-sponsored life insurance policy will remain in effect for 31 days after your termination date. During this time, you have the option to convert the policy to an individual plan. Please contact [Insurance provider] at [Contact information] for more details.
If you have a Health Savings Account (HSA), you will retain ownership of the account after your termination. [Company Name] will pay the monthly maintenance fees for your HSA through [Date], after which you will be responsible for any fees associated with the account.
Your company-sponsored life insurance policy will remain in effect for 31 days after your termination date. During this time, you have the option to convert the policy to an individual plan. Please contact [Insurance provider] at [Contact information] for more details.
Remember, the specifics of final pay and benefits will vary based on your location, industry, and company policies. Always work closely with your HR and legal teams to ensure compliance with applicable laws and regulations.
Make Writing Termination Letters Easier With Magical
Remember, a graceful employee termination experience or letter isn't just a formality. It's a crucial document that can impact the employee's future and your company's reputation. Take that standout template off the shelf. Spruce it up so it screams 'you' and suddenly, even the biggest challenges seem manageable —and you don't have to compromise on doing things right.
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