What is a Termination Letter?
A Letter of Termination of Employment is given when an employer wishes to terminate the employment of an employee for various reasons. This letter also details the reasons for the involuntary turnover, lists the next steps for the employee to take and explains any benefits or compensation they will receive. People refer to Termination letters as letter of separation, a notice of termination of employment, contract termination letter or a pink slip.
Termination of employees will be subject to the contract of employment as well as the relevant State Shops and Establishments Act or the Industrial Disputes Act, 1947. In some cases, it is mandatory to provide a notice period and compensation for severance.
Usage of Termination Letters
- Without cause: Without cause refers to employment dismissals related to company downsizing and larger market factors, unrelated to specific employee performance or fit within the company.
- With cause: With cause refers directly to an individual employee’s performance and behaviour such as Misconduct, Performance or capability issues, Redundancy & Breach of a statutory restriction.
- End of business contract: This letter is used to end business relations with another party you previously entered a contract with.
Elements of a termination letter
- Termination date
- Inform the employee of the termination of their employment and specify the date it will effectively end.
- Reason(s) for termination
- The reason should be really clear and to the point, to avoid confusion or misinterpretation. Include evidence to support your reasoning. Additionally, mention the warnings given to the employee, if any.
- Compensation and benefits going forward
- This can include severance pay, payment for unused leave days, and any other salary owed. Also, let them know what will happen to their healthcare, life insurance and retirement funds. Additionally, they will not receive the accrued salary and other amounts that are owed after the effective date.
- Return Company Property
- Notify the employee of any property they need to return. This could be a company cellphone, laptop, keys, ID badges and parking passes to name a few.
- Signed agreements
- Most employees sign some form of non-disclosure agreements and other employment-related documents during the onboarding process. Remind the employee of these agreements and include a copy for their review and records.
- Contact information
- Before signing off include the contact details for their specific HR representative.
FAQs
An Employment Contract or Employment Agreement is a legally binding employment document that lays down the stipulations relating to the performance of an employee’s duties during the course of his employment.
No, not signing the termination letter does not affect the termination.
Companies are not obliged to give notice to an employee before termination or layoff, unless the employee is under contract or covered by a union agreement. The terms of the contract regulate the contract.
Hey @HarshitShah
The things to include in an employee’s personnel file are: