A letter of termination or termination letter is a formal written document by the employer to an employee stating that they have been terminated from their job position. Employers use the termination letter to inform an employee’s dismissal from the position when involved in company policy and law violations or other misconduct.
What is Written in a Letter of Termination?
A termination letter must contain the following information:
Name of the terminated employee
Designation of the terminated employee
Time and date of termination
The reason or cause for termination
Notice of the signed agreements
Description of future steps to get owed salary and benefits
Contact information for HR and Payroll Division
Are Employers Required to Give a Letter of Termination?
According to the Federal Labor Standards Act (FLSA), an employer does not have to notify the employee before their termination by providing a termination letter. The employer can decide to end an employee’s employment in the company or vice versa; they can choose to leave the company at their will unless the employees are a member of contractual work, union, or mass layoffs.
Why Does the Employer Issue a Letter of Termination?
An employer issues a termination letter to keep a record of the fact that they acted reasonably and legally to decide on termination. It also demonstrates that the company gave various opportunities to the employee to improve their work in case of any legal action.
A letter of termination is more important when letting go of senior employees. It is a reminder of the Non-Disclosure Agreements, Trade Agreements, and Non-Compete Clauses that employees agree to and sign when starting their job. The letter helps the company maintain its reputation and avoid unknown circumstances.
What Are the Types of Termination?
The letter of termination must clearly state the reason for the employee’s dismissal. Employers usually terminate workers based on one of three types of terminations.
With Cause: Violation of company policy or other logical reasons.
Without Cause: Mass layoffs, downsizing, or revenue fall.
Contract Limitation: If the employer did not update the employment renewal period for a contractual worker.
What are the Reasons for an Employee’s Termination?
Companies have various policies that every employee is bound to maintain when on company property. The company can terminate an employee from their position for many reasons, some of which are given below:
The company incurred sudden loss due to the employee
Intentional property damage
Unfair means and misuse of position
For performance issues or misconduct scenarios, usually, the employer organizes Performance Improvement Programs (PIP) but can terminate an employee if they fail to improve.