Handling involuntary termination is a likely occurrence for human resources managers and employers throughout the span of their career. While the termination process may be uncomfortable, it is an essential part of ensuring employees are provided with the information, tools, and clarity they need to move forward beyond their time at your organization.
When the reason for termination is particularly acute or unpleasant, both employees and employers should remember to still handle the process with care and humanity, regardless of how unpleasant it may be.
Follow along in this article to know exactly what to do (and what NOT to do) in employee termination.
We’ve decided to terminate an employee. Now what?
The first essential step in termination is scheduling a meeting between the employer and employee. A termination meeting is critical to a) provide notice of termination in-person or over video chat, and b) allow employees to express questions or concerns regarding the reason for termination.
First and foremost, meeting before sharing a termination letter is a respectful and kind gesture. Second, clearing the air will also help employers avoid lawsuits in discrimination or other harmful charges.
Tip💡: Do not send a termination letter to your employee without providing information by meeting in-person or over video chat with them first.
What is a termination letter?
A termination letter is a written notice of termination sent from an employer or HR manager to an employee. The letter provides the reason for termination with evidence, as well as administrative steps to move forward, including information about benefits, health insurance, and any other details outlined in an initial employment contract.
Why are termination letters important?
In general, it is recommended to draft a termination letter should there be any legal disputes. This will assure the company has documented the date of dismissal and receipt of company property.
While termination letters are not legally mandated, some internal HR department policies require them.
Reminder💡: If the termination is non-discriminatory or not in violation of contracts or union agreements, employers can generally terminate employment at any time and for any reason. There can be differences state-by-state so it’s important to familiarize yourself with your local laws.
Types of termination letters
Involuntary termination typically falls into three categories: Without Cause (otherwise known as a ‘layoff’), With Cause, and due to the End of a Business Contract.
Termination without cause is commonly referred to as a layoff. This termination is typically due to economic circumstances that are outside of the employee’s control. The pandemic in 2020, is an example of employers needing to terminate workers without cause.
When it comes to mass layoffs, you’ll want both remaining employees and departing employees to feel respected and informed. It is important to provide the specifics of the layoff, including the who, why and how.
To facilitate termination without cause, a manager or representative from human resources will facilitate one-on-one meetings with employees before providing any written notice.
TIP💡: Providing severance packages and communicating this to existing staff is one way to ease the transition for both employees who’ve lost colleagues and departing staff as they search for new work.
Termination with cause is releasing an employee or employees based on poor performance or behavior outside of company values or the law.
If an employee is underperforming, it is recommended that the individual is notified of low performance standards, and further provided an option to improve in a set performance review schedule, or a guided coaching plan when company resources allow. Documenting this process is important. If the employee does not improve performance, this documentation will provide the evidence managers need to fairly facilitate the termination process.
Another example of termination with cause is when an employee or group of employees behave in ways that, either continuously or acutely, violates the company’s values or code of conduct. Obvious violations include harassment, violence or threatening of violence, and falsifying records.
End of business contract
Finally, employers may terminate an employee who the company previously entered an agreement with via business contract. This kind of termination is typically referring to workers, consultants, or partners, who are supporting the organization within a 1099 contract for freelance work.
Contracts like these typically stipulate that termination must be notified in writing and provide an agreed-upon timeframe for notice.
What to include in termination letter
✔ Date of letter
✔ Employee name
✔ Company name
✔ Date of termination
✔ Explain reason(s) for termination
✔ Write a complete list of company property to be returned
✔ Provide details on final paycheck, vacation pay and any severance pay
✔ Provide details of other benefits such as health insurance and COBRA, and how these will be affected moving forward
✔ Remind the employee of any confidentiality or non-compete agreements signed upon hiring
Tip 💡: It is crucial a termination letter is honest and clear. When listing the reason(s) for termination, be sure to provide concise evidence. There should be no blurred lines in this description or room for interpretation.
Sample termination letter: Without cause
January 15, 2022
Over the last several months, [Company Name] has experienced financial difficulties due to lack of work in our industry. We have explored many options, including the introduction of new products to replace those made obsolete by technological advances. Unfortunately, our efforts have not resulted in increased sales and work.
After reviewing our options, we have concluded that we must eliminate approximately 52 positions. It is with deepest regret that I inform you that your position is one that will be eliminated effective February 1, 2022.
You will receive a final paycheck on February 2, 2022 in addition to payment for paid leave days you have remaining. As discussed in our meeting, you will also receive a $15,000 severance payment. Please sign and return the attached claim document to ensure you collect this.
Your healthcare benefits will remain in effect for 120 days post-termination. Thereafter you will have the option of continuing coverage under COBRA.
You are requested to return your company cell phone, keys and ID badge on your last day of employment.
Please accept our appreciation for your contributions during your employment with [Company name].
Human Resources Manager
Why it works: This termination letter adapted from SHRM is effective because it maintains respect and compassion while still maintaining some professional distance.
Sample termination letter: With cause
September 1, 2021
This letter confirms our discussion today informing you that your employment with [Company name] is terminated effective immediately due to Misconduct.
Following our investigation, we have concluded that your conduct toward other employees from July 2nd to August 3rd, 2021 violated the company’s code of conduct policy – specifically, your display of sexual images, as well as acute instances of sexual harassment toward various co-workers.
Your final paycheck will be provided to you on September 15, 2021 and will include payment for unused, accrued vacation hours.
Your health insurance benefits will continue 60 days beyond September 15, 2021. Your rights to continue coverage under COBRA will be provided to you by mail from our plan administrator.
You can contact [retirement plan administrator] at [phone number] regarding your retirement plan distribution options.
Please keep in mind you have signed confidentiality agreements, attached for review.
The following [Company Name] property must be returned to human resources immediately: Cell phone, laptop, and key card.
Should you have further questions, please contact me directly at [phone number] or [e-mail].
Human Resources Manager
Why it works: This termination with cause letter adapted from SHRM is effective as it acknowledges the investigation process, the specific behaviors, and immediate dates of action.