What You Need to Know Before Sending A Termination Letter

Terminating an employee is never easy. Find out what to include in an employee termination letter and how to conduct a professional separation meeting.

Few tasks that HR professionals and hiring managers perform are more challenging than terminating an employee. On top of the emotional stress of the situation, there can be significant legal pitfalls to avoid. Whether separating the employee for cause or simply ending their career at-will, the termination meeting and subsequent documentation must be managed professionally. Continue reading to discover what you need to know before writing an employee termination letter.

Unless you have an employee who simply stops reporting for work, a termination letter should be issued at the end of a separation meeting. These meetings can be difficult, but there are ways to go about them that will leave both parties feeling comfortable. A best practice is to have a checklist of employer-issued items you’ll need the employee to surrender upon separation, like ID badges, laptops or company phones. The checklist should also include personal materials you issue to the employee; i.e., information about COBRA along with their letter of termination.

In most states, employment is “at-will.” The meaning of at-will employment is that the employee may be terminated for just cause or for no reason at all. They are employed “at the will” of the business. Some states and even municipalities may have exceptions to “at-will” status so it’s wise to check with local ordinances to determine whether or not you have to document a reason for the separation.

Are you required to provide a termination letter?

Federally, and in most states, a termination letter is not legally required. In some states, currently including Arizona, California, Illinois and New Jersey, written termination notices are required by law. Some of these states have specific templates employers must use for the letter. Even if your state doesn’t require a termination letter, they can be valuable to the business and the employee. Also, be sure to review the differences between an independent contractor and an employee before you draft your termination letter.

What is a letter of termination?

A letter or termination should be brief and to the point. Specify that the employee is being terminated, the effective date, and, if applicable, a short description of the infraction for which they are being separated. Include information about forthcoming COBRA documentation and/or information about severance pay, if applicable.

If you don’t intend to finalize the employee’s wages at separation, the letter should outline any time due, including accumulated sick, vacation and/or personal time will be included in their final paycheck during the normal pay cycle. For employees without direct deposit, make a note on whether they want their check mailed or if they will pick it up.

Why use a termination letter?

When terminating an employee at will (or if they are being laid off), the termination letter can provide the employee with documentation in support of an unemployment claim. If they are being separated for cause, the letter may support any dispute (depending on your state) that arises out of their application for benefits. In most states, separation for cause that would disqualify an employee from unemployment benefits will require they were terminated for an intentional infraction of a rule. Even if the employee fails to provide the termination letter to their local unemployment benefits office, you will have a copy for your file. Some companies ask the employee to sign a copy of the termination letter for their records.

What is a release of claims?

Another tool businesses often use when separating employees is a “release of claims.” This form is a waiver, signed by the employee at separation, releasing the company from any future claims of harassment, discrimination, or any other protected right under federal, state or local ordinances. In exchange for their signature, consideration is given to the employee in the form of severance pay.

In many states, employees have a specific length of time to read and sign the release. In some states, they even have the right to revoke their release up to a week after they’ve signed it. It’s important, if you utilize these documents, to review the statutes in your area.

Termination letters, like termination meetings, should be short and to the point. They should not be apologetic or personal. A brief outline of the violation of policy that led to the separation is sufficient. The termination meeting should review the letter, then move on to surrendering company property, advising the staffer of their rights, and allowing them to remove their personal effects from the workplace.

As difficult as it may seem, it is possible to terminate an employee professionally and cordially. Be prepared with the checklists and documents you need to ensure the session goes as smoothly as possible. To avoid spending time on termination letters, be sure to focus on employee engagement strategies to retain and support your great team.

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