Terminate an employee: What is a termination letter?

A termination letter is a document used by an employer to tell employees that they have been fired. Employee misbehavior, such as a breach of business regulations or the law, is the most common reason for termination letters. While termination letters are often issued by employers to workers, they can also be written by individuals who choose to leave the firm willingly (resignation letters).

In Singapore, employment-related procedures are governed by the Employment Act.

What is the significance of termination letters?

A termination letter is a written record of an employee’s dismissal, containing the cause for dismissal and any other relevant data. This letter is significant because it proves that your organization has terminate an employee in a fair and lawful manner.

Termination letters are frequently the final stage in a process. They can close the loop and show that an employee was given every chance to meet expectations and improve performance prior to termination. This is also one of the last pieces of paperwork that a dismissed employee will get from your company.
From that standpoint, a termination letter can clarify your company’s termination procedures and give insight into what occurs next.

Termination letters, particularly when dismissing senior personnel, may also act as a gentle reminder of the employee’s NDA, non-compete terms, and restraint of trade agreements.
If these penalties are contractually imposed, you may also need to arrange a share transfer or sale with stakeholders.

How to terminate an employee in Singapore?

When should you use a termination letter?

A termination letter is often used in conjunction with the termination of a company/employee contract. It is one of the most crucial documents to terminate an employee since it reveals the formal reason for their termination.

1. Resignations and voluntary terminations

The act of terminating employment with an employer voluntarily. This is distinct from involuntary termination in that it is started by the employee rather than the employer and can be done for a variety of reasons, ranging from improved employment possibilities to a change in home and family life.

In some cases, a termination letter is not necessary. Instead, you will most likely receive a letter of resignation. Nonetheless, you should be ready to advise employees on future moves, benefits and pay, and other concerns that may continue beyond their tenure with the organization. Keep in mind that resignations might occur unexpectedly and have a long-term influence on your firm. It’s usually a good idea to be prepared and, if feasible, have an action plan in place for how to keep the business running when staff decide to leave.

2. Termination without reason involuntarily

Involuntary termination is the most serious (and delicate) of all termination circumstances, implying that the employer has decided to fire an employee for particular business reasons. Termination with cause might occur for a variety of reasons, including any of the following:

➤ Misconduct (on- and off-duty)
➤ Prolonged delay or absence
➤ Failure to adhere to corporate policies
➤ Inadequate performance
➤ Harassment or physical assault

In this circumstance, a letter of termination outlining those precise reasons would be necessary, and it is a best practice even if employment is regarded “at-will.”

Involuntary dismissals, particularly those resulting from poor performance, are sometimes accompanied by additional pertinent papers. All of this paperwork may be important and can protect your business if your former employee files a wrongful termination claim or other legal action.

3. Layoffs and involuntary termination for no reason

Companies must sometimes minimize expenses by cutting workforce or shifting corporate activities. As we observed during the coronavirus epidemic, difficult financial times can also contribute to involuntary employee terminations. This form of termination is often known colloquially as layoffs.

While layoffs can be permanent, as shown in a move or merger, this is not always the case. Sometimes these layoffs are just temporary since it has been decided that business will pick up again within a certain time frame, thus the corporation wants employees available to return to work as soon as feasible. This is prevalent if the layoff occurs during a seasonal slowdown in economic activity.
When layoffs occur, a termination letter can help clarify the formal cause for the layoff and provide any pertinent information about when employment may return.

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How do you draft a letter of termination?

Writing a termination letter can be challenging, but it is an essential part of the process of terminating an employment relationship.

1. Before you begin, a word about tone

Termination letters are an essential component of the employee lifecycle. Whether employees are laid off or fired due to misconduct, it is critical to remain professional and courteous throughout formal contacts.

Keep in mind that if the termination is unexpected, you will be reducing an employee’s pay, health insurance, and other living necessities while also putting them in an uncertain position. While the company’s answer to an employee’s well-being is ultimately not the company’s response, you should be aware of these conditions before beginning the dialogue and demonstrate compassion if appropriate.

Your termination letter should also serve to reduce some of this confusion by laying out clear and concrete future actions, if applicable.

2. Compile all pertinent information

Before you begin writing a termination letter, gather all of the fundamental facts you’ll need to complete the task. This information will vary based on how long a person has been with the business and what responsibilities they have.

If you’re terminating a freelancer or contracted employee, it may be as simple as providing a notice of the final day of work and allowing the contractor extra time to complete any remaining work.

3. Begin with the fundamentals

When you start drafting your termination letter, you should start with the basics, such as the employee’s name and position with the organization. If your company is large enough, you may additionally need to provide the employee’s ID, department, and manager or supervisor’s name. This data can be shown in a list at the top of the page. To clearly identify the intended receiver of this information, it should be visible, explicit, and easy.

4. Inform the employee of the date of termination

One of the most crucial pieces of information is the effective date of termination. This should be included early in the letter to establish clear boundaries for future company activities.

When you terminate an employee for cause, the termination date may be the same day the letter is written, effective immediately. Other times, particularly during layoffs and other situations where there is no reason to dismiss someone, you may issue an effective end date well in advance (often months) to allow staff time to prepare.

5. Explain the reason(s) for the termination

The reason for termination is perhaps the most important aspect of the entire process from the employee’s perspective because it informs them why they were legally fired.

If employees are fired for cause, you can point to earlier written warning letter or months of accumulated paperwork demonstrating poor performance. More serious concerns, such as violence or theft, may also be specified as legitimate causes for termination.
Whatever the reason for termination, be upfront and transparent in articulating these difficulties so that the employee knows why they were let go.

If the firing is based on a single or recurring occurrence (such as chronic tardiness), offer precise facts about that incident.
Be prepared to debate these points with your exiting team member when you issue this letter (if doing so in person), but bear in mind that the decision has already been taken. Regardless matter how the employee behaves, you should intend to terminate the employment.

6. Describe future remuneration and perks

Even if you terminate an employee for cause, they will still be entitled to certain benefits, which you must state in your termination letter. Companies may provide severance benefits in addition to a pink slip. These are sometimes situational or reliant on some form of NDA. You should be prepared to discuss these topics if they arise.

7. Outline the next steps as well as any disclaimers

You may need to give direction on what should happen next, depending on the circumstances of the termination. Security may be standing by to remove an unhappy employee out of the premises in the case of an abrupt, involuntary termination.

You may wish to give a timeline to enable employees finish out current contracts, transfer over tasks to other team members, and exit with minimal team disruptions for terminations worked out over time.

Human resources may have a policy outlining the processes and procedures to be followed when establishing deadlines for departing workers, therefore examine current rules before developing this section.

8. Finalize data and contact information

A corporation may need to contact an employee beyond their termination date. This might occur when employees refuse to return business property or when the firm wants to mail a final severance cheque, tax papers, or other similar communication.

List any important contact information (cell phone, home address, etc.) for your employee as part of the termination process and ask them to check that everything is correct before they leave. This will allow the company to contact you if there are any unresolved difficulties.

At the same time, make sure to provide information on who your worker should contact if any concerns arise. Remember that standard employee hotlines may be inaccessible to former workers, and that local numbers may not be the best points of contact in the future.

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