It is difficult to find obedient employees. Even a single bad employee can damage your growing business. This is why it is necessary to terminate toxic employees. They are a barrier to the success of the organization, affecting the overall office environment and the morale of your other employees. However, terminating an employee can be a difficult task as it has several technicalities and documentation associated with it.
Table of Contents
- 1 What is Termination and Termination Letter?
- 2 Employee Termination Letter
- 3 When do You Require an Employee Termination Letter?
- 4 Sample Termination Letter
- 5 What Information Do You Require for the Letter of Termination?
- 6 Key Points about Letter of Termination
- 7 Contract Termination Letter
- 8 Final Thought
Additionally, there can be many reasons to fire an employee. The most common reasons are due to their poor performance and disciplinary issues. Although performance-related issues can be resolved through training, some issues are really not resolvable, no matter how hard you try, forcing you to terminate the employee. Let’s understand the nuts and bolts of termination letter below.
What is Termination and Termination Letter?
Before we go into the details of what an employee termination letter is, let’s help you understand what termination really is. Termination, from an employment perspective, means when the job of an employee ends voluntarily or involuntarily. Voluntary termination means that the employee has themselves resigned from the organization or has retired. Involuntary termination means that an employee is terminated by the employer due to any justifiable reason. They are dismissed, fired or laid-off from the company. In this, employers are required to fill an employee termination letter.
A letter of termination is a form of letter that is used by companies or employers who want to terminate an employee due to their poor performance, incompetence, unacceptable behavior, layoffs, or any other reason. Additionally, you would require the basic information about the employee for issuing the letter. This letter is also known as the Letter to Fire an Employee and a Pink Slip.
Employee Termination Letter
When do You Require an Employee Termination Letter?
Many organizations do not even tolerate even the smallest of mistakes. Even the smallest of lies or untruthfulness can result in an employee getting fired. Here are some of the cases which can result in employees getting fired;
An Employee Cannot Perform the Job
Employers invest a lot of money on training employees. However, if employees cannot do the job properly and are incompetent, even after being provided with training and coaching, this means that they should be terminated. Some companies often give leverage and decide to put the employee into different roles and change their work requirement in hope of resolving the issue. If they are still unable to perform the task seamlessly, it is time to let the employee go rather than wasting money on them.
An Employee Cannot Adjust to the Culture of the Organization
Ideally, all employees must be adaptable and fit in the environment of the company. A good employee is able to adjust to a diverse environment, approaches, and welcomes all kinds of thoughts. They know how to be adaptable and make the business benefit in every aspect. But some employees do not share the same values. When a new employee cannot adapt to the culture of your organization or there are signs that they cannot fit in, it is time to fire them.
An Employee Violates the Company’s Code of Conduct
Every organization sets some of rules and regulations which automatically make the employer expect that employees will follow all of them. Employees must act ethically under the code of conduct of the firm. This means that they are required to develop relationships with customers as per policy and treat each and every co-worker respectfully and equally. If the employee displays any of the following unethical acts, you would be required to terminate the employee instantly.
- If the employees bullies or harasses a co-worker.
- If the employee accepts gifts that either exceed or do not come under the gift policy guidelines.
- If an employee tries to bribe or accepts a bribe from a vendor.
- If an employee comes to work and does not work most of the time, spends time on the computer to shop and pay bills, and do other things that have no concern with a business’ growth.
An Employee is Found Responsible for Theft
Employees have no right on a company’s property. But there are certain employees that steal from employers. Be it a pen or pad or post-it notes or using social media platforms while the boss is away, employees do steal and it is a serious issue. Employers have all the right to punish the employee either in the form of termination or legal proceedings if they are found responsible for theft. This is why companies ensure to keep checks so that they can catch them quickly, including reconciling statements, and regular audits.
An Employee Fails to Keep Commitments
Employees are responsible to keep their commitments. They have both small and big commitments to the organization. Be it showing up for work in time or finishing the project quickly, an employee needs to ensure that they do it all. At times, employees may miss deadlines but it is not possible for them to miss deadlines every time. A good employee will always keep their boss updated if they are unable to perform the tasks on time and request them to extend the due date, but if an employee does not do that and keeps their boss on the blindside, it is high time you should realize that you should give them a letter of termination.
These are just a few common reasons that may result in termination of any employee. In general, anything that is termed disrespectful or unprofessional is not acceptable. You should first take actions to resolve it (if it is possible) and evaluate its results. If things still not improve, you can simply terminate the employee.
Sample Termination Letter
What Information Do You Require for the Letter of Termination?
Letting the bad employee go can provide relief to you. Also, when you fire that employee, you need to handle things professionally and mention the details in writing. When terminating an employee, you need to make sure that you inform them as to why they are being terminated. One of the most important pieces of information that you would require to make the termination letter is the basic information of the employee who is going to be terminated. You need to know the name of the employee who will be terminated, t the name of the person who is handling the termination, and the name of the company. Additionally, the date of termination should also be written in the termination letter.
Key Points about Letter of Termination
An Employee termination letter has certain terms and conditions which employers need to take care of. Let’s explore some key elements about the letter of termination that can help you understand the letter properly.
Name of the Company and Termination Date
The first thing employers need to ensure is the company’s name. Besides the name of the company, you need to write the date of the termination in the space provided. Both of these elements are basic and are written on top of the letter.
Reason to Terminate
The next step is to write the name of the employee and provide an appropriate reason for termination. The reason should be really clear and obvious. Generally, the reason is “for cause” and may be because of poor performance, misconduct, absenteeism and alcohol usage. After mentioning the reason clearly, you are also required to mention the warnings that were given to the employee, if any. These are the opportunities that a company provide to the employee to rectify their mistake. If an employee does not do so, employers have all the right to terminate them.
An employee may be entitled to loans and returns against the name of the company. They must pay back loans and everything else that is outstanding on or before the effective date of termination (written above). There is a section in the employee termination letter where you are required to write the details about outstanding loans. If there are no loans, you are required to provide information about the things which should be returned.
For instance, if an employee has a uniform, car, equipment, badge, paper work, documentation, credit card, or anything that was provided to them by the company during their work tenure, they are required to return all of that to the company. Employers have all the right to clearly write each and everything in this part. To include these details depends on the employer.
Another most important thing that should be highlighted in the termination letter is that the employee will not be able to receive any benefits after or until the effective date. For instance, they will not be able to take advantage of causal leaves, annual leaves or vocational benefits. Additionally, they will also not be able to get the accrued salary and other amounts that are owed after the effective date. You also need to mention the date on which the employee would receive the final payroll.
Health Insurance Coverage Expiry
The next step is to provide the expiry date of health coverage. It depends on the employee whether or not to keep the health insurance coverage. After the termination, employee can opt for this within 60 days only otherwise, employers will not consider it. Besides health insurance coverage, employee’s other insurance coverage would get expired on the effective date.
Amount of Severance
When the employee is about to get terminated, employers provide them with a severance package. This is the benefit that employee gets when they leave the employment. Basically, this exchange of payment is made so that employee keeps all the information confidential about the company. Employers can provide a severance package as a lump sum amount. Employers need to mention this amount if they are providing it to the employee. If they are not, there is no need to include this paragraph.
Appeal for Termination
Employers can also give the right to the employee to appeal their termination. For example, if an employee does not find the termination fair or think that there could be something else done in this regard, they can write it down in this section. Employers can provide limitations to the employee in terms of providing them a number of days to make their appeal. If the employer does not want to provide the right to appeal regarding termination, there is need to add this paragraph.
Lastly, the employee is required to write the date, sign and return copy of the letter to the employer. It is the organization’s duty to ensure that the signed copy is also provided to the employee. When the employee signs the letter of termination, it ensures that they have agreed to all the terms and conditions.
Contract Termination Letter
Employers may find a need to write a termination letter when they are required to fire an employee. This letter confirms that the employee is going to be fired on the specific date. Additionally, it summarizes the information that the employee would require to know. It covers all the details about outstanding benefits, health benefits, coverage, reason behind termination, provided warnings, amount of severance if the employer is willing to give etc. They can appeal for their termination (if the employer allows them to). Employer’s need to keep the copy of this letter with them so that they can use those records as they come in handy whenever required in the future.
Making a termination letter can be a daunting and complex process. How about looking at some sample termination letters? You can also use the samples to save to your time and effort. All you need to do is to edit the details. We have a number of employee termination letters and contract termination letters for employees and companies. If you also want to save your time, you can download free letter of termination samples from our main website.