Employee Termination Letter
Author: Michael C. Jacobson, XpertHR Legal Editor
When to Use This Letter
When a final, official decision has been made to terminate an employee for "cause" or misconduct, HR professionals should use this letter as a template to craft an official notice of termination to the exiting employee.
Ideally, this letter should be sent to an employee after a formal termination meeting has occurred, during which time HR should have already collected any company property, including access cards or keys and company-owned electronic devices. It is almost always best practice to inform an employee of termination in person, with few exceptions. If the HR professional is concerned about violence or escalation of a tense situation, then he or she should discuss it with legal counsel before proceeding with a termination meeting or sending a termination letter.
It is important to formalize this process so that the employer can memorialize (and later prove) the decision to terminate, the timing of the decision, and ultimately, the formal end of the employment relationship. If a post-termination dispute were to arise, or if a former employee were to bring a lawsuit after termination, this letter will almost certainly become a piece of evidence considered by a judge or a jury. HR professionals should always keep that in mind when writing a termination letter.
This letter is also significant in that it should clearly communicate a final decision, the formal end of the employment relationship, and the existence and parameters for any post-termination benefits or obligations. To the extent HR professionals can be effective in communicating that information, the letter will serve to educate and comfort the exiting employees, and possibly even diffuse otherwise tense situations.
Date: [Enter Date]
Transmitted by: [Enter Mode of Transmission (certified mail, in person, etc.)]
To: [Enter Name and Address for Intended Recipient]
Dear [Enter recipient's first name]:
This letter serves as formal notice that your employment with [Enter Name of Employer] has been terminated as of [Enter Date of Effective Termination]. This is a final decision and is not subject to review.
[OPTIONAL]: As we discussed during our meeting on [Enter Date of Termination Meeting], you are entitled to a severance package, which includes [Enter Total Amount of Severance Payment]. You are also entitled to [Enter Compensation for Accrued, but Unused PTO, Accrued paid sick time or leave, if applicable].
[OPTIONAL]: In exchange for the severance package, you agreed to [Enter Terms of Release, if any]. You also agreed to honor the terms of your [NonCompete/NonSolicitation/Confidentiality Agreement] for a period of [Enter Time of Restriction] and within a distance of [Enter Number of Miles] from [Enter Name of Employer]'s office located at [Enter Employer's Address]. Please be advised that our internal HR department, as well as our legal counsel, [Enter Name of Legal Counsel], will be monitoring the status of these agreements.
We have received from you your [Access Card/Security Badge/Key Card], together with your [Company-Owned Cellular Phone/Company-Owned Laptop Computer].
In accordance with [Enter Employee's Home State Name] law, your final paycheck, which includes the aforementioned severance and unused benefits compensation, [will be sent to you by (Enter Date for Deadline of Termination Pay Requirement) via certified mail, with return receipt requested] or [was provided to you in-person by (Enter Name of Person) at the time of your meeting on (Enter Date of Meeting).
If you would like to collect any personal belongings that were left at the office, please call or email [Enter Name of Contact in HR] at [Enter HR Contact Telephone Number] or [Enter HR Contact Email Address]. We will then arrange to have your belongings shipped to you as soon as possible, and at no expense to you.
[OPTIONAL]: You will also receive a separate notification from the HR department concerning your post-termination employment benefits. This letter will provide you with information regarding your eligibility for continuation of health care benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA) and any state regulations pertaining to the continuation of your benefits.
Please be aware that you should keep us informed regarding your contact information so that we can provide you with information and documentation in the future, including updates regarding your benefits status and your tax paperwork.
We sincerely wish you the best of luck in your future endeavors. If I can be of any further assistance, please do not hesitate to contact me.
Very truly yours,
[Enter Name of HR Representative or Employer]
In preparing this document, best practice is not to use specifics where they can be avoided. Termination letters that detail exactly why an employee was fired, or which review the disciplinary process that lead up to termination in detail are extremely problematic for employers.
Likewise, HR professionals should stay away from using their opinion, mentioning personality conflicts or using any kind of demeaning, punitive or derogatory language in these letters. Otherwise, HR runs the risk of angering individuals who may be emotionally vulnerable, but worse yet, they bind their employers to the facts on the page. Thus, if any aspect of the description is wrong, exaggerated or inaccurate, a plaintiff's attorney might use that as a means to undermine the entire disciplinary process and ultimately, the decision to terminate the employee.
It's also important not to hold employee wages hostage in exchange for any kind of agreement from the employee. The outgoing employee is owed unpaid wages or benefits (to the extent such an agreement exists or the law provides) regardless of whether he or she agrees to a severance package or to a release or waiver, for example. Employers should make strides to recover company property prior to paying out final wages, but should be extremely careful not to violate state law pertaining to the timing of final paychecks.
If the company intends to provide the outgoing employee with a positive job reference in the future, it would be best not to state that in a termination letter. That type of information is better conveyed in person during the termination meeting. This way, the positive sentiment is communicated, but the employer is not committing to it in writing, should circumstances change in the future.
This template should not be used if the HR professional suspects that a particular termination might be problematic or that a particular employee is likely to escalate a dispute or sue the company. Instead, HR professionals and/or senior executives should consult with an attorney prior to drafting any communications that are intended for the employee in these situations.
The vast majority of states in the US have laws pertaining to the timing of the final paycheck, so it is crucial that HR professionals familiarize themselves with the regulations in their state and remit final (and total) payment by that time. Most states also have different types of penalties that employers might be exposed to for violating these statutes, ranging from back pay to fees associated with collecting unpaid wages to "triple" damages. Accordingly, HR professionals must not only comply with the regulations, but must be able to offer proof that they complied with the regulations if a dispute were to arise in the future.