Termination Letter : Definition, Types and Format

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Often the biggest hurdle managers face is dealing with unproductive and troublesome employees, who add nothing to the team, and instead act as a burden wasting everyone’s time. As harsh as it may sound, often the best course of action is to get rid of these employees and hire more efficient people to replace them. But even in firing your employees, there are a few formalities that need to be taken care of. For instance, writing a termination letter is one. In this section, I will demonstrate how to write an official termination letter to send off your troubling employee.

What is a Termination Letter?

A termination letter is a formal document presented to an employee to notify that he has been terminated from a job, a position, a project or a contract. There may be many reasons to terminate an employee, for example- unproductivity, inefficiency, violation of rules or policy, divestment, unacceptable behavior, harassing other employees, fraudulence, etc. It is the responsibility of the pertinent authority or head of the respective department to write the termination letter to the employee and make the termination official.

Types of Termination Letters:

The following types of termination letters can be written:

  1. Insurance Termination Letter
  2. Employment Termination Letter
  3. Lease Termination Letter
  4. Agreement Termination Letter
  5. Tenancy Termination Letter
  6. Termination Acceptance Letter (see Acceptance Letter)
  7. Volunteer Termination Letter
  8. Termination Letter for Fraud
  9. Vendor Termination Letter

Planning before the writing:

The termination letter serves as a very important formal document that may be used in legal proceedings in the event that the employee files for unemployment or seeks legal action. So, before the drafting, revisit the termination policies or sit with your legal counsel to make sure you have all the legal grounds covered. After the document has been prepared, preserve a copy for future use. 

Steps in writing a Termination Letter:

1. As per the business letter format in which all official letters are written, the letterhead consists of the name, designation, office address and other contact information of both the manager overseeing the termination and the employee being terminated, along with the date of sending the letter.

[Name of the terminating manager]

[Designation]

[Office address]

[Contact information]

Date:

[Name of terminated employee]

[Designation terminated from]

[Office address]

2. In the opening paragraph, convey two very important information straight away:

  • The fact that the employee has been fired from his current position
  • The effective date of termination

3. Although it is not compulsory, you may state the reason for the firing. If the reason for firing is beyond your control as a manager (for example, downsizing of the company), state your sorrow and empathy. However, it is best to communicate the reason in person.

4. Let the employee know about the salary, compensation, and benefits that they are entitled to before the termination is effective. Once the termination has taken effect, they will be stripped of all their salaries and benefits.

5. Request the employee to kindly return all the company resources and property handed to them within a specified date.

6. Remind the employee of the contracts and agreements they have signed which will hold valid even after termination; for example, non-disclosure agreement, confidentiality agreement, etc. This is to imply that breach of those contracts would still trigger legal consequences.

7. Provide a contact address at the end for the employee to contact in case of any queries regarding the issue.

8. The name of the firing manager and his signature should be included at the bottom of the letter.

A few tips to remember:

1. As the termination letter may later be used in legal purposes, the language used must be very professional. Do not write anything irrelevant or inappropriate.

2. Include all the necessary details, such as:

  • Name of the manager in charge of firing the employee
  • The effective date of termination
  • The contracts signed between the employee and the company etc.

These details may need to be reviewed in the future for legal purposes.

3. Do not write anything that might be taken as a sign of reproach. You may need to rehire the employee if circumstances shift. So be as professional as you can.

4. Being fired from a job is not a pleasant experience. So you may give your employee some peace of mind by at least letting him know why he has been fired although it is not mandatory. It also helps him improve in the future.

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