The term "termination of employment" refers to when an employee's employment with a corporation comes to an end. An employee may be fired from a job voluntarily or due to a decision made by the employer. Employers may terminate an employee's employment for various reasons, including downsizing, poor performance, or redundancies. If the relationship with the employer has not been formally terminated with a notice of termination of employment, an employee who is not actively working due to illness, leave of absence, or furlough is still deemed employed. Therefore, let's understand the basics of an employee termination letter.
Important Points regarding Employee Termination Letter
- The end of an employee's employment with a corporation is referred to as termination of employment.
- Termination can be voluntary, such as when a worker decides to leave on their own.
- When a company downsizes, layoffs, or fires an employee, this is called involuntary termination.
- Severance packages are optional, implying that a corporation does not have to provide them to employees who lose their jobs.
- Unemployment compensation may be available to workers who are unemployed due to no fault of their own.
Factors To Be Considered For Employee Termination
An employer must take the following measures when deciding to terminate an employee:
- Reasons for termination
First and foremost, you ought to specify the appropriate reason for termination beforehand. It consists of the activities wherein the termination of an employee is applicable. These may be based totally on low performance, violation of a rule, harassment, insubordination, etc.
- Termination Policy
After selecting the above factor, you need to have the guidelines in place. These regulations have to dictate the grounds and the process for termination. Here, you ought to get all of the workers' signatures as consent for the policy at the settlement.
- Employee Review Process
Reviewing the performance of the employee is one of the strong points in consideration before firing an individual. It should be assessed whether they are contributing to the betterment of the organisation or not.
In short, it's the method that helps you choose whether firing an employee is necessary.
- Inform the Employee
If, after the audit interaction, you feel the employee is not the best fit for the organisation, you should evaluate the situation and let them go. Here, you should privately inform the employee. However, this isn't easy but do so at the earliest opportunity to allow the employee/individual to look elsewhere.
- Severance Package
After the termination of an employee is conclusive, you ought to settle on the issue of severance. It is a joblessness pay that a business is supposed to pay to the leaving worker. These joblessness advantages can be a lump sum installment, health care coverage until some time, etc. Assuming your approach rules a severance bundle, you should begin the fundamental system of severance packages right away.
- Proper Send-Off
After the above steps, you should give the employee a legitimate farewell. For this situation, you should say goodbye to the worker with useful advice and goodbye messages. Lead a post-employment survey ahead of time to get viable feedback on your business.
Types of Employee Termination
1. Voluntary Termination
In this sort of termination, the employee voluntarily leaves the organisation. The reason for leaving can be the absence of development or openings or worker advancement, individual issues, etc.
2. Involuntary Termination
Involuntary Termination alludes to an occasion wherein the business eliminates an individual from work. It may be for low execution, representative conduct, infringement of organisation rules, and so on. This sort of end can likewise be the consequence of a worker’s disciplinary activity.
3. Employment at Will
This type of termination directs that a business can terminate an individual anyplace at any spot with no excuse.
4. Mutual Termination
As the name itself proposes, this type of termination emerges when the two individuals, i.e. the employer and the employee, presume that they are not a solid match.
Also Read: What Is a Flexible Benefit Plan?
Legal Requirements for Termination of Employees in India
Indian Labour Law Nomenclature
In Indian law, there are two types of employers and two types of employees:
Employers are either:
- Establishments—a term that encompasses all employers
- Factories—a term that means manufacturing establishments. Mines may sometimes be included in this category.
Employees are either:
- Employees—a term that consists of all types of employees in all kinds of role
- Workmen—a term used in the Industrial Disputes Act, 1947, defines employees whose primary role is not supervisory, managerial, or administrative.
Likewise, certain state laws might avoid senior administration workers from their extent of utilisation. In these occurrences, work contracts come first.
Laws governing termination of employment in India
Since work law is a simultaneous subject in the Indian constitution, work and business guidelines in the nation are represented at both the government and state levels. The principle government rules that direct the end of work incorporate the Industrial Employment (Standing Orders) Act (IESA), 1946, and the Industrial Disputes Act (IDA), 1947, as altered.
In addition to this, Indian Labour is directed by the Shops and Establishments Act, instituted in many states with minor contrasts in execution rules. The Shops and Establishments Act controls work and works in all premises where an exchange, business, or calling is done. Further, the execution of particular state laws contrasts as per the space of activities of the business—these are laid out in the laws and their supporting guidelines.
Some Important legal rules that are to be complied with for terminating employees in India
- The Industrial Disputes Act, 19 47 commands a 30-to 90-day notice period while ending or terminating "workers." For manufacturing establishments, estates, and mines with at least 100 labourers, "termination for convenience" requires government endorsement; it requires just government notification in different areas.
- India's work laws refer to the accompanying reasons that legitimise termination for cause—obstinate rebellion or insubordination; burglary, extortion, or deceitfulness; resolved harm to or loss of manager's merchandise; participating in pay-offs or any illicit satisfaction; nonappearance without leave for over 10 days; constant late participation; misconduct during working hours; or ongoing carelessness of work.
- Businesses can terminate employees under convenience, at any time, with or without reason. However, the employees should be given a chance to be re-hired if the employment scope opens again, only if they were not let go under any legal or ethical circumstances.
- In the case of a female employee being fired if pregnant or looking for maternity leave, businesses should adjust their accommodation against the danger related to rebelliousness with the arrangements revered in the Maternity Benefit (Amendment) Act, 2017.
- Non-contend arrangements are not e nforceable under Indian law, while non-solicitation conditions can be implemented in restricted ways.
- The "work for hire" standard applies under the Indian copyright system. This means if an employee has done “work,” this principle allows an organisation to keep the copyright for work under its name rather than the worker.
Termination Letter Sample
1. An employee termination letter in case of a probationary employee
Employers typically recruit representatives and keep them waiting on the post-trial process for the underlying few months before affirming their contract. This probation period is generally 3 months. It, nonetheless, differs from organisation to organisation. If the representative fails to meet the organisation’s task requirements, then, at that point, they can be given a job termination letter.
Mr Suresh, Manager
(ABC private Limited)
We recognise the work you've placed into your job during your probationary period. Unfortunately, the outcomes did not meet the organisation’s expectations. This letter is to inform you that your work with us has ended from today.
We will handle your outstanding compensation and your Record of Employment on the following payment date. The documents will be sent to your place of residence.
All the best for your future undertakings.
(Mobile - 9862164511)
2. Immediate termination letter to employee
This is the termination letter designed for employees. It can likewise be used as a prompt end letter to employees in case of immediate termination. This letter incorporates the essential substance which informs the employee regarding their termination.
(Udyog Vihar, Gurgaon – Haryana - 122001)
We regret to inform you that your employment with XYZ firm is discontinued from today. Your termination is the outcome of:
(Reason for termination- Explanation 1)
(Reason for termination- Explanation 2)
Kindly return the organisation properties you possess. Delay in this process would reflect on your final salary.
Severance payments will be made as per the organisation’s policy. If you are qualified for any excess paid leaves, they will be determined and paid under the organisation’s regulations. You can contact the HR office in case of any doubts.
3. Employee termination letter for poor performance
After the effective recruitment of a worker, non-execution of important works can be expensive for the association. In any case, assuming the worker neglects to perform, you can utilise this termination letter example to the employee.
We regret to notify you that your work as a manager with XYZ Ltd. has officially ended effectively from 22.12.2021.
The organisation’s decision to fire you is based upon your poor performance in the last 90 days, which has not improved despite repeated warnings. You were already provided with a written warning indicating the result of continued poor performance.
Your severance payment which consists of the unsettled leaves, will be provided with your last salary. You can contact the HR office for further inquiries.
We wish you the best in your future.
4. Employee termination letter for a particular business, i.e. in case of an employee of the restaurant
A restaurant business is a delicate business that depends on client encounters when inside the premises. Subsequently, the restaurant board gives extraordinary consideration to the client experience directly from the second they enter the premises to when they leave. Nonetheless, if your worker shows improper behaviour before the client or is engaged with deceptive practices at work, then, at that point, you can utilise this letter for work termination letter format for your restaurant employee.
We regret to notify you that your employment will end on 22nd December 2021. This date will be your last day of work with M/s XYZ Limited, which has been decided as per your notice period regarding employee termination indicated in your agreement.
The justification behind the end of work is inappropriate lead or conduct with the client. The subtleties are referenced in the attached documents.
Kindly return any organisation equipment in your possession. Delay in returning organisation property on your own will create a setback for your last cheque.
You are qualified for a severance bundle which you will get on your last day of service. You can contact the HR office for further inquiries.
We wish you achievement in your future undertakings.
5. Sample termination letter in case of employee benefits
This termination letter informs the worker of the end of their employee benefits. The letter specifies the proper explanations for why this decision was made along with the termination date.
(City, Pin Code)
As per our records, you have not been actively participating in activities (mention the particular reason) with the organisation for this financial year (add date). Because of this, you are not eligible to receive allowance or employee benefits in this context.
Further, any extra advantages related to the previously mentioned remittance will be limited (add date). Other benefits you will continue to receive are mentioned in the attached document.
Last Date of benefits eligible status ______________
Date of cancellation of eligible benefits ___________
6. Employee termination letter – general sample
An example of a termination letter where the employee was hired, but their performance has turned out to be below your expectations.
We regret to inform you that your employment as the marketing head in our company is terminated. The reason for your termination is because of your poor performance, which did not increase sales. The decision regarding termination is final and irrevocable.
Please return any organisation property in your possession. You can contact the HR office for any query.
We wish you success in your future.
7. Sample employee termination letter on account of prolonged absence
With regret, we would like to inform you that your employment with our company stands terminated effective from 31/12/2021.
Your termination is because of your uninformed leaves from your work for a prolonged period. You will receive all your dues and the company’s relief package.
The HR executive of our company will provide you with the rest of the details. Kindly get in touch with HR at the earliest.
We wish you the future.
8. Sales employee termination letter sample
Subject - Termination letter for employment
This letter is to inform you that your employment as a Sales Agent (or other job title) has been terminated. It will end once your notice period has expired.
Your performance has not been up to the mark for the last 6 months, and you were provided with a written warning letter. The management has also discussed this matter with you and provided you with the necessary training and opportunities to improve your abilities. Despite the company's efforts, your performance did not get any better.
Due to this, we have concluded your termination, which is final and irrevocable. If you have any questions, you can contact the HR department.
We wish you success in your future.
9. Employee termination letter sample on account of redundancy
Subject- Termination of employment because of redundancy
This letter is to inform you regarding the operational functioning of the ABC project.
The work regarding the ABC project is no longer required; therefore, the company feels your service is no longer required. As a result, your contract with XYZ Pvt Ltd will be terminated.
We wanted to say that your termination is not due to performance. Therefore, this will not reflect on your performance, and we would be happy to provide you with a letter of recommendation.
According to your contract, you will be paid a redundancy pay of Rs 15000.
Thank you for your valuable contribution to our company.
10. Basic Termination Notice Sample Letter
We regret to inform you that you are being removed from your Technician job effectively from 10/06/2020 due to the pandemic. Due to the lack of funds, we are forced to do the necessities with this layoff. The termination due to this layoff is indefinite; therefore, you can consider it permanent.
We wanted to say that your termination is not due to performance. You have been an excellent asset to our company. We sincerely regret taking this layoff and would be happy to provide you with a letter of recommendation.
We wish you immense success in your future endeavours.
Name – Mr Oberoi
Title – HR
Employee termination is conducted for a variety of reasons. They may be voluntary, involuntary or other types of termination. Every organisation is required to have a set of rules regarding employee termination. We hope that this article has explained to you in detail the reasons for termination, termination of employees, termination letter format, how to draft termination letter, etc. For more information about GST, salary, payments and tax, follow Khatabook .