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- How To Write An Employee Termination Letter
How To Write An Employee Termination Letter
- Modified: 28 November 2024
- 6 min read
- Better Business
Melissa Yeo
Business Writer
Melissa's unique storytelling expertise makes a difference for small business owners and entrepreneurs. Her background in content and social media spans eight years in various industries, including publishing, ecommerce and marketing. At Osome, she makes everything about running a business less intimidating. From specific accounting and bookkeeping advice to insights for company growth, Melissa's articles help you to take the next step on your entrepreneurship journey.
Jiaping Zhang
Reviewer
Jiaping, CA Singapore and SCTP member, is our Corporate Tax Manager based in Singapore with a decade of expeience on Singapore corporate tax. With in-depth knowledge about Singapore corporate tax law and regulations, she can help with corporate tax compliance that matters to every company.
Letting an employee go is never easy, but it’s an inevitable part of registering 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
Example
[Date]
Dear [Employee Name],
We regret to inform you that your employment with [Company Name] is terminated, effective as of [date].
Attendance: Failure to inform your line manager on days of absence and repeated tardiness has resulted in your colleagues having to cover your work. This makes it challenging for the company to meet its targets
Performance: We regret to inform you that your performance falls short of your Account Manager position. During your performance review in 2020, your line manager noted that you required improvement in your attention to detail and reporting skills. In the first quarter of 2021, the company provided you with task-specific training to assist you in the role, but your performance problems persisted throughout 2021. This resulted in your manager giving you three written warnings, with the negative performance review in 2021 reflecting that your job performance is inconsistent with your position’s requirements.
Misconduct: We have investigated and concluded that your behaviour towards other employees on [date of the incident], has breached the company’s policy. Furthermore, your explicit language used in emails to clients was unprofessional and are a direct violation of company policy.
Compensation for your [remaining benefits: accrued annual leave, sick days, etc.] will be in your final paycheck, which will be paid to you on your usual payday.
The following [Company Name] materials must be returned to human resources immediately:
[Type of material (cellphone, laptop, keys, etc.)]
Should you have further questions, please contact [contact name].
Regards,
[Name]
Termination Letter Template #2 – Termination due to downsizing
Example
[Date]
Dear [Employee Name],
Over the past year, [Company Name] has faced financial challenges due to external events beyond our control. The company has explored various options, including pitching our services to clients beyond our usual industry. Unfortunately, our efforts did not lead to increased revenue and work.
After considering our options, we have concluded that we have to remove about [number] positions. As a result, we regretfully inform you that your position will be removed effectively as of [date].
Within the next week, a Human Resources representative will reach out to you to arrange a meeting. In this meeting, you will find out more about your termination benefits and other important information such as the services of an outsourced firm to assist in your job hunt.
Your work is commendable and we appreciate your contribution to [Company Name] during your employment.
Should you have further questions regarding your benefits, please contact your HR representative at his company email.
Sincerely,
[Name]
Termination Letter Template #3 – Termination letter for probationary employee
Example
[Date]
Dear [Employee Name],
We acknowledge the effort that you have put into your position as [job role] during your period of probation with (Company Name).
We regret to inform you that your performance did not meet our business expectations. This letter is to inform you that your employment with (Company Name) stands terminated effective as of [Date].
We will be processing your outstanding wages on your usual payday, (Date). The following [Company Name] materials must be returned to human resources immediately:
[Type of material (cellphone, laptop, keys, etc.)]
Should you have further questions, please contact [contact name].
We wish you the best in your future endeavours.
Sincerely,
[Name]
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.
When it comes to managing your own business, it is challenging to juggle everything from company incorporation, marketing, writing a termination letter, to payroll. However, you don't have to struggle on your own – we're here to help.
Instead of scrambling at the eleventh hour, think about outsourcing to a reliable partner who will oversee your back-end administrative work. At Osome, details are crucial to us — it is only by paying attention and following the process that we can keep the bigger picture in mind and spot opportunities for improvement.
Let our accounting experts in Singapore handle everything from payroll, reports, invoices and taxes while you concentrate on growing your business.
Melissa's unique storytelling expertise makes a difference for small business owners and entrepreneurs. Her background in content and social media spans eight years in various industries, including publishing, ecommerce and marketing. At Osome, she makes everything about running a business less intimidating. From specific accounting and bookkeeping advice to insights for company growth, Melissa's articles help you to take the next step on your entrepreneurship journey.
