A letter of termination, also called a termination letter, is a formal notice that an employer sends an employee to inform the employee about their dismissal from employment. A letter of termination is a vital part of the termination process and also indicates important details about the employee’s termination date, final paycheck, benefits, and other useful information for the employee’s transition. A written letter of termination not just helps the employee, it also protects the company.
What information should a letter of termination have?
The following are important pieces of information a letter of termination should contain:
Reason or reasons for termination
Details about compensation and benefits
List of company property items that the employee must return
Non-disclosure agreements or other notification of agreement
Contact information of HR
A letter of termination must indicate the circumstances of the separation or dismissal. Generally, three situations could lead to termination:
With cause. An employee’s work performance or behavior does not meet the standards set by the employer or if the employee violated the company’s code of conduct.
Without cause. The company had to let go of the employee because of larger market factors like downsizing.
End of contract. When the employer decides not to renew a short-term employee’s contract that has ended.
Are companies required to give a letter of termination?
Technically, there is no federal law that legally requires employers to give a letter of termination to employees. The Fair Labor Standards Act (FLSA) also does not make it a requirement. Certain exceptions are when employees belong to a union, collective bargaining agreement, company closures, or mass layoffs. However, there are U.S. states that require employers to give written notice of termination.
Even if you do not need to send a letter of termination to employees, remember that it is a valuable part of an amicable and professional termination process. It will be beneficial for both the employee and your business.
Why is a letter of termination important?
A letter of termination is an important document because it can serve as documentation to support an unemployment claim. In case an employee was separated for a cause, the letter of termination may also be used in case of a dispute for benefits.
A letter of termination can protect the company and help the separated employee be aware of useful information.
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