You may need to terminate an employee for a variety of reasons, including poor performance, misbehaviour, or downsizing. However, terminating an employee is a problematic scenario that can have significant legal consequences if not handled correctly. To ensure legal compliance, learn how to properly convey an employee termination and what to include in an official termination-of-employment letter. Also explore the employment contract template below that will help you in drafting clear and legally compliant agreements.

What is a Termination Letter?
When you terminate or lay off an employee, you ought to send them an official termination letter. A termination-of-employment letter, also known as a notice of termination or a pink slip, is a legal document that tells an employee of the end of their work. It provides information about the cause for their termination, how to receive their last salary, and any measures they must take, etc.

Key Elements to Include in a Termination Letter

1. Start with the date
The firm name and address must be already printed at the top as you can be writing the termination letter on the company letterhead. Thus, you can start with the date you wrote the letter. Under the printed header, you can write the date either right or left on top of the letter.

2. Address the employee
Next step is to include the complete name of the employee. It is best to use a salutation like 'Dear' to address the employee. 

Example: Dear [employee name]

3. Make a formal statement of termination
Make it clear that the employee's job has been ended by the company. You can start with "I'm sorry to say that...", "This letter is to formally inform you that...", or "Please take note of that..."

4. Specify the date of termination
You must specify the date from which the termination comes into effect. This would be the last working day for the employee in the company. The time gap between the date of serving the termination notice and the final date of termination is required to be equal to or more than the notice period stipulated in the employment contract.

5. Include the reasons for termination
List all of the reasons why the employee was terminated. In the event of a termination without cause, fully explain the company's viewpoint. If the termination is for cause, provide proof whenever available. The letter must explicitly state that the employer gave the employee enough chance to take corrective action before deciding to proceed with the termination. 

6. Explain the settlement details
Explain what benefits and compensation that the employee may be entitled to. These can take the shape of provident funds, pensions, leave encashment, or severance money. Inform them on how they may obtain their final paperwork, such as experience certificates and salary slips. If the employee insurance policy covers them, indicate whether the coverage will expire or continue until a specific date.

7. Remind them of the binding agreements
Non-disclosure agreements and non-competition provisions, for example, sometimes remain in effect after an employee departs the organisation. Make careful to remind them of any agreements that are still in effect. Moreover, you may also provide a copy of such agreements for their records.

8. Include the contact details of the HR
Towards the conclusion of the letter, add the contact information for the HR person whom the employee may approach with questions. If there are many persons in charge of distinct HR functions, include them all, as well as the functions they oversee.

9. Conclude and sign the letter
You might end the letter with best wishes or express sympathy for the employee. The ending greeting might be 'Sincerely' or 'Best Regards'. Also, leave some room for a signature and write your name underneath it. Lastly, print the letter and make sure to sign it.

Communicating Employee Termination
Some of the key steps to follow in your contract of employment template:

Declare termination verbally and in writing. Employee terminations should be announced verbally and in writing. You can absolutely explain and document the event. Moreover, a termination of employment letter is an excellent approach to reporting the occurrence.

Confer with the employee in private with witnesses. Talking to an employee about termination in private is better. Consequently, include an HR representative and the employee's management in the termination room. 
 
Speak calmly. Use precise, definite language to terminate an employee. Avoid emotive words to avoid escalation. Also, use precise wording to avoid misrepresenting the employee as being furloughed or laid off with the possibility of rehiring. Remember to explain the termination reason in a few words and avoid rambling. 
 
Give the employee all federal and state legal notices. Employers must give all state and federal legal notices during termination.
 
Give more departure data. It's essential to inform employees about final remuneration, unemployment benefits, returning business property, project transitions, and severance pay in addition to legal requirements.

Termination of Employment Contract Template Example
The example below is about how you can use a termination of employment contract template:

[Your Company Name]
[Company Address]
[City, Postcode]
[Date]

To: [Employee Name]
[Employee Address]
[City, Postcode]

Subject: Termination of Employment Contract

Dear [Employee Name],

This letter serves as formal notice of the termination of your employment contract with [Your Company Name], effective [date]. The reason for this decision is [state reason briefly, e.g., redundancy, poor performance, or misconduct].

As per the terms of your employment contract dated [contract start date], you are entitled to [outline final entitlements, e.g., a notice period, accrued holiday pay, or severance]. Your final payment, including [details like salary up to termination date and accrued but unused holiday], will be processed on [date].

Please ensure that all company property, including [specific items like laptops, keys, or ID cards], is returned by [deadline]. Failure to return company property may result in deductions or further action.

We remind you of your continuing obligations under your contract, including [confidentiality, non-compete clauses, or other relevant clauses], which remain in effect after termination.

If you have any questions or require further clarification, feel free to contact [HR Representative’s Name] at [contact details].

We wish you all the best for the future.

Yours sincerely,

[Your Name]
[Your Position]
[Your Contact Information]

Conclusion
A well-written termination letter may help ease the process for the company and the individual working for the company. Including the essential components covered—clear communication, legal compliance, and an empathic tone—along with seeking assistance from online lawyer services, you may guarantee a professional, courteous, legally sound termination.

So, create your termination letter effortlessly with Robot Lawyer! Answer a few questions, save your progress, and complete on any device. Download, print, and make it official by inviting others to sign. Check Robot Lawyers’ contract of employment template and customize it if you need to make it fit your specific requirements.