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Employee Termination Letter Template

An employee termination letter is used to inform an employee that the company is ending their employment relationship. In addition to the letter, employers should provide a formal separation agreement detailing the employee's rights, severance, and other relevant details.
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Discrimination

State and federal laws forbid employers from terminating an employee for reasons involving age, gender identity or expression, race, religion, national origin, pregnancy status, sexual orientation, disability, and other factors. If found guilty of wrongful termination, an employer could face penalties, sanctions, or fines.

How to Terminate an Employee (4 steps)

1. Give Notice

employer handing termination letter to employee

How much notice depends on the employee and the situation in the workplace. If the termination is polite and cordial, the employer may want them to stay for at least two weeks in order to train someone new. If there is fear the employee could become hostile to their co-workers, the termination should be done immediately. This will best benefit all parties in order to create a smooth transition.

2. Which Day is Best to Fire an Employee?

employer speaking with employee

Again, this depends on the employee. For the employee’s benefit, the firing should occur at the beginning or middle of the week. This will allow sufficient time for the individual to seek alternative employment during normal business hours.

If the employee has a history of erratic behavior, the recommended time to do it is Friday and at the end of the workday. This approach allows an employer to give the terminated employee the time to gather their things without the embarrassment of their former co-workers watching them.

3. Inform the Employee of the Termination

employee standing by doorway with box of belongings

If the employee has access to the workplace, it is best to meet in person to handle the termination. The employer will typically request all types of access to the premises (e.g., keys, fobs, etc.), which must be handed over.

If the working relationship is on a freelance, teleworker, or remote relationship, then it’s best to use the employee termination letter.

4. End Payroll and Benefits

employee taking out notice to end payroll and benefits from envelope

Payroll: The employer is responsible for ending all payments or salaries to the employee. If there is a severance, the employer’s payroll service should be notified.

Benefits: All benefits to the employee should be terminated or transferred (if applicable).

  • Health Insurance — After termination, the employee will have to find short-term insurance coverage on their own.
  • Retirement Benefits — Most 401(k)’s can be transferred to an IRA at a bank. Otherwise, it can be complicated and the employee should discuss it with an accountant about their options.