Handling the termination process professionally is just as crucial as the hiring and onboarding processes. The most common practice for respectful and effective employee dismissal is to send a letter of termination. In this article, we explain what a termination letter is and how to write one, with a template and example letters to help guide you. Related: 7 Steps for Effectively Terminating an Employee. A termination letter is a formal notice letting an employee know they are being dismissed from their current job.
This letter details the reasons for the involuntary turnover, lists the next steps for the employee to take and explains any benefits or compensation they will receive. Termination letters are also called a "letter of separation," "a notice of termination of employment" or "contract termination letter.
Termination letters are used when you inform someone that their employment is ending. Termination letters are normally used during the following circumstances:. Without cause: Without cause refers to employment dismissals related to company downsizing and larger market factors, unrelated to specific employee performance or fit within the company.
With cause: With cause refers directly to an individual employee's performance and behavior. End of business contract: This letter is used to end business relations with another party you previously entered a contract with. The Fair Labor Standards Act has no requirements stating an employer must provide a letter of termination, or notify an employee of their dismissal ahead of time, except when an employee is part of a union or collective bargaining agreement.
Additionally, some employers may need to give advanced notice during mass layoffs and big corporate closures on a case-by-case basis. Termination letters are important because they can help maintain a good reputation for your company, show professionalism and provide a record of events for legal reasons, though most employers are not required to provide one. Providing a letter of termination is a more compassionate and respectful way to dismiss employees.
Giving employees notice allows them some time to handle external situations that will change with their unemployment. It also gives employees a full understanding of the details of their dismissal. It's important to continue showing respect for an employee and assist them with their transition. This fosters a better relationship between the employee and the company. As long as the termination is non-discriminatory and no contract or union agreement is in place, employers can terminate employment any time for any reason.
In the case of a possible legal dispute, having a document of termination will provide confirmation of the dismissal, provide a receipt of company property and specifically detail the effective date of termination.
Related: What Is Wrongful Termination? With Examples. Here are steps you can follow to write a proper termination letter:. First, inform the employee that their employment is terminated and specify the date it will effectively end. This eliminates any potential confusion and allows the employee to prepare for their dismissal.
End the letter by thanking the departing employee for their time or contributions. Sign the departure letter Conclude your letter by signing it with your name and title. Related: How to Write a Professional Email. There are many methods you can take when creating your employee departure announcement, but the template below is one example you can use:.
I am writing today to notify you that [Employee Name] is departing the company, effective [leave date]. As of [leave date], please direct all department questions to [Interim Employee] until we are able to secure a replacement. Please join us on [date] at [time] in the office break room to offer our farewells to [Employee Name]. We are very appreciative for all the hard work that [Employee Name] has done for us over the last [length of employment], and they will be missed.
They have played an integral role in the [name contribution] and they will be difficult to replace. I would personally like to wish [Employee Name] the best of success in all future endeavors. Here is an example of an employee departure announcement using the template above:. Dear Dillian Manufacturing staff,. I am writing today to notify you that Andrea Dinton is departing the company, effective Sept.
You do not want someone who is no longer working for you to know all about what is going on inside the office as he or she could use whatever information that he or she finds and hand it over to your competition, compromising your entire business. Return of company property Exiting employees are required to hand over all company property that is currently in their possession.
This is everything from company books, keys, ID badges, cellphones, computers, and any other items that are owned by your company. You do not want the employee to have continued access to these items as this may allow them to obtain important company information that could very well do harm to your business.
You may also like free termination letter templates. Remove or change passwords While this has been said many times before, company information is something that should always be protected no matter what. So, it would make perfect sense that you would have to change all the passwords to all the accounts that the exiting employee has access to.
You have to state that the departing employee will need to provide their direct general supervisors with all the passwords and any other information pertaining access to computer files and even telephone messages. This means that whatever company email your employee has or whatever network they are using on your company system, you need the passwords to them so that you can have them changed before the employee walks out your door for good.
Status of vacation time and unused sick time Employees that are to be terminated are paid to a maximum of 30 days for unused, accrued vacation time. If the employee has used time that has not yet been accrued, then payment to the company for this time will be subtracted from the last paycheck. This is to ensure that the employee is properly compensated. You may also see word termination letters 7.
Benefits status letter Upon the termination of the employee , they will be sent a letter from Human Resources that will outline the status of their benefits once they leave the company. This will include everything such as life insurance, retirement plans, expense account plans , and even health coverage.
You want to make sure that the employee will be able to acquire all of this information as this is something that they need to know before they exit your company. You do not want the employee to get away with more money than he or she deserves, so make sure that you go through the company payroll to get the numbers right. Repayment of money owed to the employee If the employee has made any expenses for the purpose of company-related business such as travel expenses or mileage expenses, then make sure that he or she has submitted an expense report outlining all of these.
Once you are able to validate that the employee has indeed made the expenses for the sake of the company, then you may be able to properly reimburse him or her. Review of the non-compete agreement or confidentiality agreement If you have had the employee sign any of these documents during his or her initial basic employment , then you have to review this with the exiting employee so that he or she knows what to expect if he or she were to ever violate them.
Even if the exiting employee has never signed such a document, there should be at least information regarding that he or she must not share any important company information with competitors within your employee handbook. T here should be a clause or a code of conduct paragraph about not sharing company confidential information or trade secrets.
Go over this with the exiting employee and remind him or her that any breach of this confidentiality will be addressed with the proper legal actions. You are requested to return all company property, including your car, cell phone and ID badge before the end of the day. If you have questions about compensation, benefits, company property, or policies you have signed, please contact Jane Doe at Need more guidance? Check out our article on firing an employee.
Have an employee who has stopped showing up for work? Check out our guide to job abandonment , which includes a letter template for this situation. If you're laying an employee off, rather than firing them, check out our layoff letter. Also, if you need to replace someone quickly, check out our guide to finding employees or post a job on free job posting sites. You may also want to check out our guide to attrition and our guide to turnover rate. There is no federal law that states that a company must issue a letter of termination, however, many employers do furnish them as a matter of principle.
As most employees in the U. You can discuss the termination with the employee, but it is best to have a written notification. Companies are not obliged to give notice to an employee before termination or layoff, unless the employee is under contract or covered by a union agreement. In that case, the employer-employee relationship is regulated by the terms of the contract.
Under the Worker Adjustment and Retraining Notification Act WARN , employers with or more employees are required to provide 60 days' notice in the case of a mass layoff or plant closure.
State and local laws may differ depending on your location, so be sure to contact your Department of Labor to find out more about local rules and regulations. Typically this will be required in larger companies with big HR departments.
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