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.

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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