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A letter of termination is also known as a notice of termination, a letter of dismissal, or a termination notice. 

While there is no legal duty to produce or deliver a termination letter, a thorough and detailed termination letter might help avoid a situation in which a former employee claims they were fired without reason or knowledge.

Although a termination letter is not a remedy against a wrongful termination case, it can be used as proof that the employee was terminated for a lawful reason if it gives grounds for the removal from the employment.

What is the relevance of a termination letter?

A termination letter is vital since it demonstrates professionalism and acts as legal documentation if needed in the future. A contract of employment frequently states that any party may end the contract with prior notice to the other.

A termination letter acts as a formal notification from the employer, just as a resignation letter serves as a notice from the employee. 

Even though the employment contract does not need much advance notice, sending a termination letter is a polite approach to end an employee’s employment.

When you dismiss an employee, the principles of natural justice compel you to provide them with the reason for the termination. You should also give them a fair hearing wherever possible. 

A termination letter informs the employee of the cause for termination and the method used to make the decision. Before writing a termination letter, meet with the employee and offer them the opportunity to voice their concerns.

What are the types of Termination letters?

There are two types of termination letters: ‘without cause‘ termination letters and ‘with cause‘ termination letters.

A ‘without reason’ termination letter ends employment due to issues relating to the firm, such as workforce downsizing or a change in organizational structure. It has nothing to do with the employee’s performance or behavior.

A ‘with cause’ termination letter terminates an employee because of difficulties with their performance or behavior. For example, if an employee consistently fails to show up for work despite numerous warnings, the employer may send a ‘with reason’ termination letter.

Important Points To Be Considered While Drafting A Termination Letter

The important steps in drafting an appropriate termination letter are as follows:

• Begin by putting the date at the top of the letter, either on the right or left side, below the letterhead of the company with its name and address.
• Address the employee with a salutation such as ‘Dear.’
• Make a formal and clear announcement of termination.
• Indicate the date on which the termination will take effect. This would be the employee’s final day at the workplace.
• The interval between serving the termination notice and the final date of termination should be equal to or greater than the notice period specified in the employment contract.
• Specify the reasons for termination.
• Describe the terms of the settlement as well as the pay and benefits to which the employee will be entitled.
• Request to return business property such as a laptop, mobile phone, or ID card, among other things.
• Remind them of the legally enforceable agreements, such as non-disclosure agreements and non-competition provisions, that even continue to apply long after an employee leaves the organization.
• Maintain a professional tone while keeping the material current, clear, and brief.
• Finish and sign the letter