Letting an employee go is rarely a pleasant experience, even when you’re ending on good terms. Depending on the states where your employees work, your company may be required to provide a written employee termination letter according to state-specific guidelines. You may also have to provide state-specific notices at the time of separation. Even if you’re not entering a severance agreement, it’s a good practice to provide written notice any time you terminate an employee.

What should be included in a termination letter, why is it important to document the termination, and how can you create an employment termination letter? This overview will help you understand what to expect when you need to provide your own termination paperwork.

What is an employee termination letter?

It’s a best practice to document terminations in writing, even if you’ve already told the employee verbally. This creates a paper trail in case a dispute arises. If you are not entering a separation agreement (where an employer provides severance in exchange for a release of claims), a termination letter will suffice. The letter should confirm the reason for ending employment, offer useful information about the termination (such as information on unemployment benefits or options for continuing health coverage), set out the reasons for the separation, and provide a statement of company property for the employee to return.

What should be included?

When you’re writing an employee termination letter, it’s important to keep the tone professional and concise—especially because it could be used against you should a dispute arise. Avoid overly sympathetic, personal, or otherwise emotionally charged language. Your goal is to inform the employee of their change in status and the reason behind it.

Termination letters should generally include:

  • Employee name and job position: Be sure to specifically address the employee you’re terminating.
  • Company and manager name: Next, include the name of the person in charge of handling the termination.
  • Dates: Include the date the letter was written as well as the date the termination is effective.
  • Reason and support for termination: Your employee termination letter should also include the reason for termination (common reasons include layoffs, downsizing, misconduct, poor performance/attendance, and the end of a business contract). If you’re firing someone for cause, be sure to add a list of written and verbal warnings to support the termination. Keep in mind that Montana employers can only terminate employees for cause unless the termination is made during the employee’s probationary period.
  • Property to return: If your employee has any company property, such as electronics, keys, or ID cards, you may provide instructions for returning that property.
  • Final details: If the employee signed a non-compete, non-solicitation, non-disclosure, or other employment agreement, remind the employee of the obligations that continue to bind them after the end of employment. Include information about twhen the employee will receive their final paycheck and about company benefits, such as health insurance. Finally, include any state-specific notices that are required at the time of termination.

If you cannot include the full list of information in the letter itself, clearly state how the employee will receive the information.

Why is it important to have an employee termination letter?

The biggest reason to create an employee termination letter is to protect your company against legal disputes. Should the employee bring a lawsuit against your company, you’ll be able to use the termination letter as evidence that you met your legal obligations.

Termination letters can also provide helpful information about what to expect as employment ends, including information about company-provided healthcare and unemployment. It ensures that your former employee knows which company property to return and also provides them with important proof of termination for unemployment agencies, social service providers, school financial aid offices, and other organizations who may need to know whether a person is currently employed.

How to create an employee termination letter

Creating an employee termination letter requires researching state-specific requirements where your employees live and work. For example, New York requires employers to inform eligible employees of their right to unemployment insurance. California requires employers to provide a specific form as well as a written notice anytime an employee is laid off, takes a leave of absence, is discharged, or otherwise has a change in employment status. Once you know the state-specific requirements, you can draft a standard, compliant template and add details based on individual situations.

Let SixFifty create your state-specific termination letters

Drafting your own employee termination letters can take a significant amount of legal research, but compliance is the key to protecting your company. Instead of asking a lawyer to draft the letters, let SixFifty help. Our Employment Agreements tools pair real legal expertise with easy-to-use technology, so all you have to do is answer a few questions about your company and download the automatically generated documents. We give you options to create simple termination letters or more complex severance and release agreements. We’ll also notify you if there are any changes to the law so your documents will always be up to date.

When you’re ready to see our employment generators in action, schedule a free product demo with SixFifty today.