What is a termination letter?

A termination letter is a letter written by the employer to the employee containing relevant details relating to their dismissal. It is typically used to give formal notice to the employee and as an official record of the fact that they have been fired from the company. This document is also referred to as:

• Termination Letter
• notice of termination
• termination letter
• termination notice
• Separation Notice

The term ""pink slip"", though less commonly used these days, probably refers to the termination letter on the pink layer of a triplicate form.

Why do employers use termination letters?

A detailed termination letter can prevent situations where a former employee may claim that he or she was dismissed without reason or information. If it includes the reasons for the employee's dismissal, it can be used as evidence that the employee was dismissed on valid grounds.

However, a termination letter shouldn’t be the only defense against a wrongful termination lawsuit – in most cases, it’s necessary to provide additional records to support employment decisions.

Are companies required to use termination letters?

There is no federal legal requirement to create or distribute termination letters in advance under the Fair Labor Standards Act (FLSA)   , but many states  impose separation notice regulations  , including:

• Arizona
• California
• Colorado
• Connecticut
• Illinois
• Iowa
• Maryland
• Massachusetts
• Michigan
• Mississippi
• missouri
• Nevada
• new Jersey
• New York
• Pennsylvania
• Rhode Island
• South Carolina
• Tennessee

Many of these states also require employers to provide information about the individual's rights. In some states, such as Georgia, employees  must sign  a separation notice in addition to the dismissal letter.  Connecticut goes one step further,  requiring a complete unemployment separation package .

What should an employee termination letter include?

For record-keeping reasons, a termination letter should include at least the following:

• Name and position of the employee
• Names and positions of managers
• Human Resources Administrator in Charge of Termination
• Date of the last day of the employee
• Current date

If the employee has company property, be sure to list those items and provide instructions for return. A detailed termination letter should also include:

• When will the employee receive his final salary and how will he receive it?
• what their severance package includes
• Details on termination of benefits, retirement fund transfer etc.
• Next steps for maintaining health coverage or receiving unemployment benefits

The termination letter often contains a summary of the facts or events that led to the decision to let the employee go, including any warnings or disciplinary actions given prior to the final decision. In the case of an at-will termination, the termination letter   may include an explanation of the at-will employment relationship, rather than the reason for termination.

States that require employment termination letters often mandate employers to issue a pamphlet detailing the terminated person's unemployment rights and benefits. For businesses operating in these states, it is important to mention the pamphlet in the termination letter as secondary proof that all state legal requirements were met.

Finally, your termination letter should tell the employee who to contact if they need to follow up or have questions after their last day at the company.

Are termination letters different for employment at will?

Most states and Washington, D.C.  consider employment at will  . This means that employees have the right to quit their job at any time, for any reason. Employers can also terminate employment without giving a justifiable reason, as long as no law is violated. In these scenarios, employers can omit the circumstances surrounding the termination and simply notify the employee of their dismissal.

However, the employer should still outline the employee's rights and benefits as well as  the offboarding process in the termination letter  . The primary difference between termination letters for at-will employment and traditional dismissal letters is the timeframe until termination.

That being said, businesses can include a list of offenses or circumstances that may result in voluntary termination. This is entirely at the company's discretion but is often considered a best practice.

How to Write a Termination Letter

Before you begin the termination process, make sure you have all the documentation you need to support your decision. This should include a list of the inciting events in chronological order, as well as a list of witnesses or reporting parties.

The following are the key steps to follow when it comes to writing a termination letter:

Step 1: Clearly identify the employee

Use the employee's name in the header and their organization's identification number if applicable. This makes it clear to whom the dismissal letter is addressed.

Step 2: Choose the appropriate greeting

Keep the tone and language professional. Using a greeting such as “Dear” is perfectly acceptable.

Step 3: Write the body of the letter

The body of the dismissal letter should be well organized and concise. Begin with the purpose of the letter and inform the employee that they are being dismissed. Then, transition to a timeline of the events that prompted the dismissal, such as  absenteeism  .

Next, remind them to return any company-issued property in their possession and explain their rights and responsibilities.

Step 4: Include the signature line

End the letter with “Respectfully” or similar words and include the name and designation of the human resources director or business owner.

Step 5: Make a copy for your employee to sign

Bring two copies of the employee termination letter to the meeting, and include other parties as well to protect HR staff from any claims of abuse or harassment. Ask the terminated employee to sign their copy of the letter and provide them with a copy as well.

How are termination letters delivered to employees?

Ideally, termination letters should be hand-delivered to employees on their last day of employment, or at the time of notification (if they have been allowed to complete a pay period).

However, in the event that a person is being restricted from attending the workplace due to layoffs or safety concerns, it is acceptable to send a termination letter. When using this approach, companies should send the letter via certified mail to demonstrate good faith efforts to meet statutory notification requirements.

How long should I keep a termination letter?

Employers must retain termination letters for the period specified by state law. If no minimum time limit is required in your area,   plan to keep the letter for at least two years .