What is termination?

Termination is the end of a staff member’s employment with a company. It can happen for several reasons that fall into two categories:

• Voluntary: In these instances, the employee resigns, retires or finishes their contract period.
• Involuntary: For involuntary terminations, the company dismisses the employee with or without cause. Discharge with cause might be for offenses such as contract violations, illegal actions, inappropriate behavior in the workplace, neglecting job duties and more. Discharge without cause occurs when the company no longer needs the employee’s services, such as during layoffs.

Related: 10 Exit Interview Questions that You Should Ask

A process for termination of team members

When a company terminates a team member, it should follow a well-planned process to make sure the separation occurs smoothly, respectfully and safely. Often, companies involve a lawyer to make sure they handle the situation legally and write a termination letter that will hold up in court. Steps for termination of employment include:
1. Identify the reason.
Clearly define why you’re terminating the employee. Meet with human resources to discuss this reasoning and make sure it’s not unfair, which could lead to a wrongful termination lawsuit. Gather documents and evidence such as performance reviews and warnings at this time.
2. Write a termination letter.
Put together a concise document that gives the employee all the information about their termination. Have the company lawyer and/or human resources department review this letter before it’s final.
3. Set up a meeting with the employee.
Schedule a meeting at the appropriate time to briefly explain why you’re terminating the employee. Schedule the meeting as early in the week as possible, so the employee can start looking for a new job immediately. Avoid having it coincide with an event such as a company anniversary or the employee’s birthday. In some cases, another supervisor or a human resources representative might also be present. Meet in a private place out of other employees’ sight or hearing.
4. Provide compensation information.
During the termination meeting, let the employee know when they will receive their last paycheck as well as benefits. Also, give the employee the termination letter that summarizes everything discussed in the meeting.
5. Escort the employee.
If an employee has been terminated immediately, particularly for severe actions or misconduct, you might have them escorted off the property right after the meeting.
6. Inform the company.
After dismissing the employee, tell the remaining staff about that individual’s separation from the company, without providing private details. Explain how the company plans to move forward, including fulfilling the former employee’s job responsibilities. Depending on the size of the organization, you might choose to inform the employee’s department first, then the company.
7. Organize employee documents.
Keep copies of the terminated employee’s records, as well as the letter of separation, in case that individual chooses to take legal action against the company.
The termination letter serves as an official record of the employee’s dismissal and should include:

• The employee’s name, title and department
• The company’s name
• The name of the manager
• The letter’s date
• The termination’s date
• The reason for termination
• If necessary, a list of evidence or warnings that led to the employee’s dismissal
• Items the employee must return to the company
• Information about the employee’s last paycheck, vacation pay, severance packages and benefits
• Any nondisclosure, noncompete or other agreements the employee signed
• Human resources contact information

You might also ask the employee to notify the company if their address changes before the end of the year, so they can receive tax documents at the correct address.

Related: How to Find Good Employees

Sample letter of separation

Keep letters of separation concise, professional and accurate. Depending on the reason for the termination, you might organize the letter in a variety of ways. Here are two sample letters of separation:

Voluntary termination of business contract

Jan. 4, 2022

Dear Robin Curate,

We are writing this letter to inform you that we will no longer need your services as of Jan. 10, 2022.

While we have enjoyed working with Curate Media Services these past three years, due to departmental reorganizations we’ve decided to terminate our contract.

Please complete all remaining assignments before our contract ends, and submit all invoices by Jan. 9 so we can pay you in full. As of Jan. 10, you will nolonger be able to access our server or networks.

Thank you for all your hard work. Please contact me via phone or email if you have questions.

Sincerely,

Carly Ambrose

Editor-in-Chief

Diversion Magazine

Involuntary termination due to layoffs

July 21, 2021

Dear Ky Hampton,

Over the past year, Express Services has experienced financial challenges due to the ongoing recession. While we have re-evaluated our budget and streamlined processes significantly, we continue to see reduced sales. After assessing all our options, we have determined we must terminate 24 positions. I regret to inform you that your position as sales executive will be removed as of July 28, 2021.

Within the next couple of days, a human resources representative will schedule a meeting to discuss compensation, benefits and resources for finding a new job.

Thank you for your hard work over the past five years.

Sincerely,

Andy Kim

CEO, Express Services

Termination Letter template for PDF & Word

Check out our termination letter template to help you write a concise letter to end of a staff member’s employment with a company.

*Indeed provides these examples as a courtesy to users of this site. Please note that we are not your HR or legal adviser, and none of these documents reflect current labor or employment regulations.

Termination FAQs

Here are some frequently asked questions about termination:

Are termination letters required?

Most companies are not required by law to give employees letters of termination. The exceptions are those located in Arizona, California, Illinois and New Jersey. Most employers, however, do provide termination letters as a professional courtesy and a legal record. Letters of separation also help employees apply for unemployment.

What’s the required termination notice period?

Under U.S. labor laws, companies only have to give a minimum notice period for termination if the employee works under contract or is protected by a union. If so, the company must follow the minimum notice stated in the contract’s terms. If a company has more than 100 employees and is closing or laying people off, they must provide employees with at least 60 days’ notice.