Q: What Is a Termination of Employment Letter?

A termination of employment letter is a document that details events leading up to and including the employee’s last day of employment. It can also include the arrangements of the termination itself, like the details of a severance package.

Why should I use a termination of employment letter?

Employers use a termination of employment letter to provide a summary of all events leading up to termination and to document any arrangements made upon termination. It’s a record both for the employer and employee and, when signed and dated by both, can be used to defend a company legally. It’s also useful for employees who are laid off, as they can use it to claim unemployment insurance.

Do I have provide a termination of employment letter?

It depends on your state. While there’s no Federal law requiring an employer to provide a termination of employment letter, some states have additional rules on the matter. Check your state’s Department of Labor website to see what your local requirements are.

What goes into a termination of employment letter?

A termination of employment letter typically contains:

  • The basics: Who is terminated from what company and who is managing the termination process on the company’s behalf.
  • The reason the employee is being terminated: Whether you fired them for failing to meet expectations or laid them off as a cost-cutting measure, write that in the letter.
  • What led up to the termination: Document why that employee was terminated, whether they were fired after multiple warnings laid off due to a financial decision.
  • The termination arrangements:
    • Items like:
      • Company property that was returned by the terminated employee.
      • Pay including severance (if any), accrued vacation, and the final paycheck.
      • Benefits including any continued as part of a severance package, COBRA options, and 401(k) or pension plan options.
      • Whether a separation agreement was offered and accepted/declined.
  • Dated signature: Both the terminated employee and the company’s representative should sign and date the termination of employment letter.

Fall in love with modern payroll

If it’s time to terminate an employee, it’s best to work with a lawyer or local HR expert to draft a letter that is written specifically with your circumstances and legally protects you.

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