Notice of Termination

A termination letter is a formal document sent by a corporation informing employees that they will be laid off or dismissed from their existing employment. 

It usually contains information about why they were fired, benefits or severance compensation, and other data about the termination. In addition, this resource includes notes with crucial explanations and writing advice.

A notice of termination is a formal document sent by an employer informing an employee that their employment contract has ended. It can also refer to the formal notification of a contract termination between two or more parties.

While a termination notice is usually given to an employee for reasons unrelated to their job performance, such as business conditions that necessitate layoffs or downsizing, it can also be given to an employee for poor job performance or misconduct.

Employers must provide workers with advanced notice of mass layoffs or plant closures in certain instances, especially if they are union members. The termination documentation is commonly referred to as a "pink slip" or a "termination letter."

If your job is terminated, but you have a union contract, your employer is obligated by law to provide you with a notice of termination; otherwise, there is no legislation forcing individual businesses to provide notice of termination to their "at-will" workers.

How Does it Function?

Most workers in the United States are recruited "at will," and companies are not compelled by law to offer termination notice when terminating an employee's services.

Suppose an employee is a labor union member, is covered by a collective bargaining agreement, or is employed under a contract. In that case, their employer is required to provide written notice of termination.

Such employees should also be notified of their termination before getting official notice. Employers in Canada must give such notice if an employee has been with them for at least three months.

The termination letter serves an essential purpose: employers and workers utilize it to avoid future conflicts. In addition, your employee will utilize the termination to apply for unemployment compensation and other federal and state benefits.

Without the termination letter, governments can refuse employees access to programs that can significantly impact their lives.

It is not necessary to make the termination letter complex. Ensure you cover your bases and supply all relevant information to avoid issues later. Instead of terminating the employee remotely, speak with them in person.

Bring a witness when you meet with the employee (for example, a manager or supervisor). Make your dismissal choice without comparing the individual to another team member. 

Always offer warnings for improper behavior, so the employee is not taken aback if you have to terminate them.

Considerations While Writing Notice of Termination 

It is tough to let someone leave, and ensuring they do not feel tricked or degraded is critical. Therefore, please arrange a brief meeting with the employee to inform them that they have been sacked.

There are times when you need to let go of staff temporarily, referred to as furloughing. Key things to remember while writing a letter of termination:

• In certain nations, you must provide enough notice, severance compensation, or grounds for termination. Also, if it is a layoff or a furlough, there may be additional rules to follow.
• Determine the last day before firing or furlough with their boss or head of the department.
• Gather any policies in force after an employee has been terminated or furloughed so that you may remind them in your letter.
• Be compassionate while remaining firm. If feasible, have another HR employee read the letter and let you know if anything seems off.
• When terminating an employee, keep the employee's respect in mind.
• Before beginning the termination procedure, enlist the help of a human resources manager or a trustworthy employee as a witness.
• Use company letterhead and write the letter in proper business letter format, with no errors or typos.
• Maintain a respectful, professional, and empathetic tone throughout the letter, resulting in a document that will be acceptable to everyone who reads it.

Classifications of Involuntary Termination 

The most common types of involuntary termination are as follows:

1. Layoffs

When facing financial difficulties, a firm may opt to lay off some of its personnel to reduce operational expenses.

It is a brief interruption in the employment connection at the employer's request due to a lack of work.

2. Getting fired

An employee may be dismissed from a corporation for breaching corporate regulations, exhibiting poor job performance, or engaging in unethical behavior that does not match the company's culture.

Employees employed "at will" may be fired without providing a warning to the employer.

3. Being dismissed without cause

The employee may be dismissed without warning if an employee's work does not meet the employer's requirements.

It is permissible in some states for an employer to fire an employee without cause if the individual is discovered to be performing mediocre work or behaving inappropriately for the organization.

4. Cause-based termination

An employee's employment may be terminated for a specific reason. However, before an employee is terminated, he or she is usually placed on an improvement plan that lasts 60 to 90 days.

If the person performs well throughout the probationary phase, they may be kept by the firm.

5. Forced resignation

If a company wants to avoid firing an employee, it may make the work environment less desirable by changing shift hours or making advancement more difficult. This is done to ensure that their prospects of being employed by other firms are not jeopardized.

You might be entitled to a severance payout if you were fired due to involuntary termination. It may contain the following items:

• Additional charge depending on your service period.
• Unused vacation or sick leave compensation
• One thing to remember is that severance compensation is not needed in some areas.
  In most circumstances, it is a mutual agreement between the two persons involved.

How to write a termination letter?

While writing the termination letter by email, bear the following key differences in termination letter structure in mind, as stated below:

1. In a letter, it is preferable to include the Sender's information, such as:
   • Name
   • Designation
   • Relationship with the target party (whether Vendor or Customer).
2. While sending an email, just the Sender's email address and designation (at the Signature) are required.
3. There is no need to define the topic in the email body individually since the subject or context of the communication will be supplied in the subject attribute of that email. However, when sending a letter in hard copy, it is best to include the topic in the letter body.
4. Mail sent to an email address is regarded as secure, with guaranteed delivery to the intended recipient. It is also not suggested to include the recipient's address or phone number in the email, as these facts should be included in the paper copy of the letter. 

Giving the termination notice via either media (hard copy or soft copy) is now essential and frequently utilized for the termination procedure for all types of businesses (B2B or B2C). 

Letter Samples

Examine the following termination letter samples for various situations:

• Termination letter for student
  In education, an educational institution may issue a termination letter owing to poor academic performance or participation in any criminal activity.
  The student's parents or guardians must receive the letter. Then, it must be presented to youngsters persuasively, which parents can do.
• Letter of Termination of Service
  The termination letter is used in business-to-business transactions. For example, the client's arguments might include late payments, extra work, etc.
  The letter must be written to the company's CEO and include the precise date of termination as well as the right cause. In addition, it is required that the letter exhibit courtesy as well as respect.
• Letter of Termination of Employment Contract
  Proper notice of termination of employment must be provided to the employee, including all necessary information such as the cause for termination, any subsequent action (if applicable), and so on.The employee will be advised of the termination if the employer wishes to provide information concerning due wages and benefits.
• Termination of Vendor Contract
  This type of letter must provide the effective date of the cessation of the services. It must also provide a detailed explanation of the grounds for contract termination, such as quality and quantity difficulties.
• Insurance Cancellation Letter
  The insurance provider often issues this letter to the client to cancel any policy due to non-receipt of any relevant information or inaccurate information submitted. The letter must be formal and free of any offensive or insulting language.
• Letter of Rental Termination
  Sometimes, the owner will issue a "Rental Termination Letter." The letter must be humble, and no personal difficulties should be stated.
• Early Lease Termination Letter
  An early lease termination letter is prepared to end a tenant's residence, requesting that they vacate the premises within a certain time frame. The authorities shall state the grounds for "Early Lease Termination" clearly and politely.It is advised to conclude the letter with appropriate thankfulness and propose a new rental place.

Sample of Notice Of Termination

Feel free to change this employee contract form to reflect the circumstances behind the contract's termination. However, this sample contract letter should include all pertinent information regarding the dismissed candidate.

A terminating employment contract template can also be modified to end different services.

[Form of notice, e.g., Registered Mail (or) Certified Mail]

[DateDate]

[Name of recipient]

[Street address]

[City, State, Zip]

Attention: [Name of individual or department]

Re: [name of subject contract] dated [date] between [name of party] and [name of party]

Notice of Termination

Dear [name]

Please be advised that [name of party terminating agreement] is hereby terminating [name of subject contract] dated [date] between [name of party] and [name of party] (the "Agreement"). 

I'm sorry to tell you that you will no longer be employed by [company name] as of [termination date]. However, as previously indicated, we believe this is the right option due to [insert reason for termination]. 

[This is the final stage in our disciplinary procedure/ a decision we took following the completion of your Performance Improvement Plan, which began on _datedate.]

You will no longer be entitled to any income or benefits related to your job as of [termination date]. Please return [business property that must be returned] to the Human Resources office by [datedate].

You are entitled to your salary until [termination date], and we will compensate you for unused vacation days. We will additionally give severance compensation in the amount of [amount]. [ You will receive a separate letter with all of the pertinent information]

[You will get a separate letter with full details of any compensation or other related information you are entitled to from us.]

Remember that you signed a non-compete, non-solicitation, and non-disclosure agreement. Therefore, you must promptly erase any information on our customers, workers, or other stakeholders that you have on paper or your devices.

If you have any concerns or need clarification, I'm available for up to [five] working days following your last day of work.

Sincerely,

[Name of the person handling termination]

Researched and authored by Manal Fatima | LinkedIn

Free Resources

To continue learning and advancing your career, check out these additional helpful WSO resources:

• Trading
• Type A Personality
• Typical Hierarchy of Investment Banks
• Venture Capital Job Description
• What Does a CFO Do