Writing a termination letter can be a daunting task, knowing that much can rise or fall on what the letter says. A few straightforward strategies can help you prepare a termination letter that manages the risks that accompany all termination decisions.
What to leave in, what to leave out
Obviously, a termination letter is a critical document. It will be scrutinized by the employee―every word will be parsed by his lawyer, and if necessary, jurors will review it during their deliberations to decide whether you proved the reasons explained in it. That said, employers should view a termination letter as an opportunity to boldly communicate why discharge is the right decision under the circumstances. With a few guidelines, you can write termination letters that communicate strength and confidence.
Confirming the at-will-employment relationship
In states that have at-will employment laws, one of the most common explanations employers give for not communicating reasons at the time of discharge is they fear that doing so might compromise the at-will relationship. That concern is legally incorrect, but we do recommend that a termination letter remind employees of their at-will status, even as you communicate your reasons for discharge. For example, a brief introductory paragraph can reinforce that status and set the stage for the rest of the letter:
The purpose of this letter is to notify you of our decision to terminate your employment, effective immediately. Like all employees at our company, you are employed on an at-will basis. While we are not required to give you a reason for our decision, we think it is important for you to understand why we reached this conclusion.
Deliver the news
A termination letter must state directly and factually the reasons for the termination while conveying the purpose and strength of the employer’s decision. While the form of that statement may change depending on the situation, it should include a detailed summary of the employee’s conduct or performance supporting the decision. When appropriate, the letter should refer to the specific company policy that the employee violated. If previous disciplinary action or performance management efforts support the decision, the letter should review those steps as well. When the decision is based on misconduct, the letter should contain a summary of the findings from your investigation:
We have concluded, following our investigation, that your conduct toward other employees on November 16, 2012, violated the company’s antiharassment and discrimination policy. In particular, the display of sexually suggestive photographs in your cubicle and the explicit language you used in describing those images to others were direct violations of company policy. Also, in October 2010, you received a written warning addressing, and additional training on, your obligations to avoid such conduct.
Some investigations of misconduct require you to decide who is telling the truth. When an employee denies the wrongdoing that supports the termination decision, the statement of the termination reasons should explain why you discounted the employee’s version of events:
We understand that you deny posting the offensive photographs, but other witnesses contradict your denial and told us during the investigation that you told them about printing the photographs and were thinking about putting them on the wall of your cubicle. Also, employees reported seeing the images in your cubicle over the course of several hours, including while you were present.
Performance-based terminations may require a broader explanation:
We have concluded that your performance does not meet the requirements of the technician position. In your 2010 performance appraisal, your supervisor noted that you needed to improve your technical skills and attention to detail. The company provided you with two additional weeks of task-specific training with a coach during the first quarter of 2011. However, the performance problems continued throughout that year. Your supervisor gave you three written reminders of the need to improve your performance in 2011 and again noted the need for improvement in your 2011 performance appraisal. Since that appraisal, it has become apparent that your job performance simply is not consistent with the requirements of your position.
Again, regardless of the reason, it’s important to remain focused and factual. Be detailed, but don’t resort to the “shotgun” approach of including every one of the employee’s missteps over the last several years. Sometimes it’s tempting to “pile on” the employee’s entire history, but some courts have noted that an employee can raise evidence of pretext by attacking the credibility of any of the employer’s reasons when the employer has asserted several reasons to support the decision. Stick to the events and previous disciplinary action or performance issues that actually contributed to the termination decision; don’t rely on stale issues to bolster your reasons.
Further, you should avoid inflammatory characterizations of the employee’s conduct. Statements such as “you sexually harassed your coworkers” or “clocking out late amounts to stealing the company’s money” likely will motivate rather than discourage legal challenges. Identify the policy the employee violated or the performance expectation he failed to meet and how his conduct fell short. Leave out the adverbs and adjectives.
So what?
In situations involving performance problems unique to a particular position or misconduct that may not be understood outside your workplace, it may be necessary to explain the significance of the reasons for termination by describing the effect on coworkers or the organization. Recall that a termination letter has several audiences after the employee receives it. Part of the purpose of the letter is to help those audiences understand the decision:
Repeated tardiness, even just a few minutes, and failure to call in before missing a shift cause a ripple effect through the entire production department. Lateness of one employee causes stress on others because they have to work faster to catch up so that coworkers further down the production line have the parts needed to complete their work. Also, delays in production of even a few units per day add up over time and make it more difficult for the organization to meet its goals.
An employee may quibble with your description of the impact of his actions, but the support for your statements should be self-evident if you (1) have a policy that defines expectations and (2) can relate those expectations to business needs. Additionally, relating an employee’s actions to the impact those actions have on coworkers helps balance the “bottom line” focus of many termination decisions.
Implement the termination
Once the reasons for discharge are explained, the termination letter should address the administrative details:
- The letter should note if the employee’s final paycheck is enclosed or, if not, when it will be mailed or deposited. If state law or company policy requires the payout of vacation or other forms of paid time off, the letter should explain the amounts that will be included in the check.
- The continuation of insurance benefits is one of the first questions raised by a recently terminated employee, so informing him when he can expect benefits information and who will send that information may prevent some anxiety and confusion.
- If the employee has been issued company property, the letter should list the specific property that must be returned. Don’t forget things like works in progress, intellectual property, software, data, or data storage media (e.g., thumb drives and CDs) that the employee may have transferred to a personal computer or otherwise removed from the work premises.
- The employee should be notified of the arrangements for returning to his office, workspace, or locker to gather his personal belongings or how the employer will return those items, if applicable.
- Remind employees of their posttermination obligations under any confidentiality agreements or covenants not to compete.
- If company policy or a collective bargaining agreement provides grievance or appeals rights, the termination letter can include a summary of those rights or copies of the pertinent policies or documents.
Avoid offers of severance pay
Employers often consider an offer of severance pay conditioned on the employee’s willingness to waive all legal claims relating to the termination. While you may see such an offer as compassion or risk management, employees sometimes view a severance offer as a sign of weakness―and the amount as an insult. Because of the potential for mixed messages, we advise employers not to include severance offers in termination letters and not to raise the topic of severance pay unless required by company policy or requested by the fired employee after the termination letter has been delivered. Once the discharge is complete, you can negotiate a severance package from a position of strength.
Bottom line
Termination letters are an important final step in making and communicating a well-reasoned, defensible termination decision. You have nothing to fear and much to gain from explaining the reasons for your decision and doing so in writing. We encourage you to consult counsel when making termination decisions and involve counsel in reviewing termination letters. With the safeguards discussed in this article, termination letters can help you strongly promote and defend your decisions, 
regardless of the audience.
Bradley T. Cave is a partner with Holland & Hart LLP and practices in the firm’s Cheyenne, Wyoming office. He represents employers in matters involving discrimination, harassment, wage and hour disputes, defamation, wrongful discharge, breach of contract, and employment-related torts. He can be contacted at bcave@hollandhart.com