How To Write An Employee Termination Letter

Letting an employee go is never easy, but it’s an inevitable part of setting up a company. No matter what, though, you can still keep things cordial.

Regardless of whether you are terminating an employee due to poor performance or financial reasons, a termination letter is needed as a formal document to inform an employee of their dismissal.

To conduct the termination process professionally, read on to find out more about how you can write an employee termination letter.

What Is a Termination Letter?

A termination letter is an official notice from an employer to notify an employee that they are being terminated from their job. This letter usually includes important information such as the reasons for dismissal, benefits or compensation they may receive, the next steps they need to take, the date of their final paycheck, as well as other relevant details.

Why Is a Termination Letter Important?

As unfortunate as termination might be, a termination letter is crucial because it:

• Clearly states the employer’s reason for terminating the employee in detail
• Provides an accurate timeline of events before the employee's dismissal
• Safeguards a company's interest to avoid future situations in the event a former employee claims he or she was terminated without reason
• Prevents future disputes or misunderstandings

What Is Needed in a Termination Letter?

According to the Ministry of Manpower, the termination letter should include important information such as:

• Last day of employment
• Date of termination
• Duration of notice period

When Do I Use a Letter To Terminate a Contract?

The Employment Act states that businesses in Singapore can decide whether to issue a termination letter or only pay the employee salary in the period before the contract officially ends.

In certain situations, both parties agree to the termination beforehand. However, other situations involve an involuntary dismissal.

According to the Contracts (Rights of Third Parties) Act, employers can terminate a contract due to the following reasons:

• Period of probation: A probation period in Singapore usually lasts three to six months before the employee officially becomes a staff member. During this period, managers can assess the employee's provisional work and terminate their contract if the work is deemed unsatisfactory.
• Retrenchment: A retrenchment is typically due to external factors such as a global pandemic or a dip in yearly revenue. In such instances, a company can terminate an employee to restructure or reduce costs.
• Employee misconduct: If an employee's behaviour is not in line with the company's code of conduct, the company can fire the employee to avoid company misrepresentation.
• Breach of contract: An employer can terminate an employee's service if he or she violates the contract, or is absent from work for more than two days without notice.

How Do I Write a Termination Letter?

Terminating someone is a difficult task, and it is crucial to make sure that your employee does not feel degraded or cheated.

If you have disciplinary processes in place, your employee should have had some warning of a potential termination. Be sure to schedule a brief face-to-face or conference meeting with your employee to notify them that they are being let go, before sending them the official termination letter.

Here’s how you can write a termination letter:

Step 1: Inform your employee of the termination date and reason

Start your letter by clearly stating the termination date. Then, follow up with the reason for dismissal. Keep your reasons clear and concise. You can also include evidence including the particular dates your employee was missing from work or other relevant details. This helps your employee understand the purpose of the termination letter and prevent future misunderstandings.

Remember to include your employee's full name in the letter, to make things official.

Step 2: Detail the next steps

Describe what happens after the termination date, such as your employee's compensation. This includes the possibility of encashment of unused annual leave, owed salary, and severance pay. You should also detail what happens to the employee's additional benefits, such as life insurance or health policy.

Step 3: List things your employee is required to return

Inform your employee of the materials they are required to return, such as an ID badge, company cellphone, or parking passes. For clarity, you can put these down in a bulleted list format.

Step 4: Put in other relevant information

Include your employee's last paycheck date to conclude the termination letter. Be sure to also put in contact information for Human Resources, if your employee has questions regarding compensation.

Termination Letter Template

To make things easier for you, here are three termination letter templates that can be tailored according to your needs.

Simply copy and paste the following and include details that apply to your situation. Before sending the termination letter, remember to check with your legal team for sign-off to safeguard your company's interest.

Termination Letter Template #1 – Termination letter for cause

Termination Letter Template #2 – Termination due to downsizing

Termination Letter Template #3 – Termination letter for probationary employee

Terminating an Employee the Right Way Doesn’t Have To Be a Painful Process

Ending an individual's employment is never easy, but sometimes necessary for a company’s growth. When using termination letters, make sure that they are ethical, legal, and fair to all involved parties.