What You Need in an Employee Termination Letter

Whether you're an employee who's been fired or laid off or an employer who needs to fire or lay off an employee, you need to understand how employment law and labor law apply to the situation in order to protect your rights. An employer must use the proper sample employee termination letter to avoid charges of unfair labor practices or wrongful termination. An employment termination letter must be properly written to minimize disputes and charges of wrongful termination, so here are some recommendations:

  • In certain cases, federal labor law, an employment contract, or collective bargaining agreement entitles an employee is entitled to a certain number of days notice before a layoff or discharge. The date of notice and effective date of termination should be provided, even when at will employment is involved.

  • Entitlement to any pay and benefits, such as vacation pay or bonuses, after termination should be described. The last date of health insurance coverage should be given, and rights to COBRA coverage should be explained.

  • The reason for discharge should be explained in a factual manner. If employee misconduct is involved, the facts should be stated in an objective manner, such as number of complaints, absentee rate, etc. Unnecessary details, derogatory comments, and personal judgments should be avoided. The employer should review the personnel files, and any employment contracts and performance reviews before drafting the notice. When employment at will is involved, the employee can be fired for any reason that's not illegal, such as illegal discrimination based on age, race, religion, nationality, gender, disability, or genetics. If there's an employment contract that states the employee may only be terminated for good cause, the employee may not be considered an at will employee, and a specific reason should be stated.

  • The employee's right to appeal the termination should be outlined in the letter of termination. Company policies and local laws must be followed. If a union is involved, a notice of termination should also be sent to the union, as specified in the union contract, to comply with labor law practices.

  • If a severance package is offered, sometimes a release is signed so that an employee agrees there are no further claims to compensation due.

  • The employee should sign the letter to acknowledge receipt. If that's not possible, it's a good idea to have a witness present when the notice of termination is given. Copies should be made and one given to the employee.

  • Employee passwords should be changed, outstanding loans repaid, and all keys, i.d.s, badges, credit cards, and company property should be returned to the workplace before a final paycheck is delivered.

  • If employee misconduct is involved in being fired, any employer notes or evaluations should be retained in case of a need to defend a future wrongful discharge lawsuit.

  • The final paycheck must be delivered within the timeframe set by state payday laws.

  • If a nondisclosure to noncompete agreement is in place, a clause referencing the agreement can be included as a reminder.

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