How Can Termination Letters Templates Benefit Your Business?

Termination Letters are a written formal notification from the employer to an employee, indicating a cessation of employment. 

These letters include any stipulations for the termination and indicate what benefits if any, the employee will receive as part of the separation. It is important to remember that most countries outside of the United States do not allow at-will employment arrangements. It is much easier to terminate employment in the United States than in most other countries, which have much stricter rules surrounding termination of employment benefits and entitlements.

Employment agreements are binding contracts between the employer and the employee. When an involuntary employment termination is to take place, there must be the justifiable cause and in line with local employment laws.

For example, in China, even if you are terminating an employee because their contract has ended and the employer has determined it will not be renewed, the employee must still be paid one month’s wages for each year of service provided, per the Chinese Employment Contract Act. This would be the standard case unless an employee was terminated for misconduct. In such cases, certain items would be considered in a Termination Letter to ensure the employee is informed of all government-required benefits and any additional separation benefits determined by the employer above and beyond local employment law provisions. Similarly, if you have an employee in Canada that you will be terminating, the employee would be due wages in the form of 1 week’s pay for every year of service (up to a maximum of 26 weeks’ pay).      

Are Termination Letters required?  

In the United States, there are only about four states (Arizona, California, Illinois, and New Jersey) that require a termination letter per local legislation. However, formal written notice of an employee’s termination is standard procedure in most other countries and a requirement as part of the termination process to ensure a fair dismissal process on account of the employer. 

How do I know what needs to be included in a Termination Letter?

Termination Letter content varies from country to country. We work with local legal counsel for all jurisdictions to ensure local employment law mandates are adhered to in the termination process. In addition to ensuring the details in the Termination Letter are complete, we also advise on the termination process as a whole, as each country has its own process and different steps to complete, many of the requirements of the employer and also actionable steps for the impacted employee(s). 

In order to maintain complete compliance, it would be ideal to bring our services into the termination discussion prior to the employee being notified, as that is usually not the first step in the international termination process. Additional background works for the employer may be necessary to complete and review before engaging the employee. This also helps to help prevent any issues as the termination notice period commences. Required notification periods are different between countries and are also based on the employee’s tenure.