Glossary of Human Resources Management and Employee Benefit Terms
A termination letter is a letter from an employer to an employee containing pertinent details surrounding their termination. It is typically used as a formal notice to the employee and an official record of the fact they have been terminated. A termination letter is also referred to as a letter of termination, a notice of termination, a letter of dismissal, or a termination notice. The term “pink slip,” although less common nowadays, may be a reference to a termination letter delivered on the pink layer of a triplicate form.
While there is no legal requirement to create or deliver a termination letter, a thorough and detailed termination letter can prevent a situation where a former employee might claim that they were dismissed without cause or without knowledge. If a termination letter includes reasons for the employee’s dismissal, it can also be used as evidence that the employee was terminated for a legitimate cause, although a termination letter is not a defense against a wrongful termination lawsuit.
For record-keeping reasons, a termination letter should at the least include the employee’s name, their position, the names and positions of their manager and the human resources administrator in charge of the termination, the current date, and the date of the employee’s last day. A termination letter will also often include a summary of the facts or events that led to the decision to terminate the employee, including any warnings or disciplinary action taken prior to the final decision to terminate. In the case of an at-will termination (see: At-Will Employment), a termination letter might, instead of a reason for termination, include an explanation of the at-will employment relationship.
Putting the facts on record isn’t the only reason to deliver a termination letter. In addition to the previous information, a thorough termination letter should also include information for the employee about their final paycheck, details about any form of severance package, and details on the cessation of benefits, the transfer of retirement funds, and suggested next steps for maintaining health coverage or seeking unemployment benefits. If the employee is in possession of company property, a termination letter should list that property and provide instructions for returning it. Finally, a termination letter should provide instructions for the employee about who to contact if they have any need to follow up or ask questions, along with contact information for that person.