Letter of Termination of Employment

What is a Letter of Termination of Employment?

A Letter of Termination of Employment is an official notice used when an employer needs to end an employee's job because of something they did wrong. Normally, Employee Termination Letters are sent after an employer or someone in authority within the employer's company, such as an HR manager or supervisor, has noticed that an employee has been involved in unacceptable or unauthorized behaviour.

The Letter of Termination of Employment serves

What is the difference between a Letter of Termination of Employment and a Resignation Letter?

A Letter of Termination of Employment is initiated by the employer to end the employment relationship. On the other hand, a Resignation Letter is submitted by the employee to inform the employer of their intention to leave the organization.

Is it mandatory to have a Letter of Termination of Employment?

Yes, it is mandatory. The Letter of Termination of Employment serves as a formal record of the termination and helps to ensure that the process is conducted in a transparent and legally compliant manner.

What are the prerequisites of a Letter of termination of Employment?

The following things should be checked before issuing a Letter of Termination of Employment:

• Check the original employment agreement to find out if there is any clause related to its termination (e.g. what is the notice period, the way a termination notice should be sent, etc.)
• Ensure that any required notices or cure period has been checked.
• Complete any pending payment or outstanding dues by the employer.
  

Who can issue a Letter of Termination of Employment?

The Letter of Termination of Employment can be issued by an employer or authorized representative of the organization, such as a manager, or HR personnel, who has the authority to terminate the employment.

What can be the duration of a letter of Termination of Employment?

The notice period varies depending on the notice period mentioned in the original employment agreement and the applicable state employment laws where the organization is situated. In most states, if the employee has worked for more than three months, the minimum notice period is 30 days. The minimum notice period must be confirmed after the checking the relevant labour laws in the state where the employer organization is located.

What has to be done once the Letter of Termination of Employment is ready?

Once this letter is complete with all the relevant information, the employer sending it can sign and send an original signed copy to the concerned employee using the method mentioned in the employment agreement. If no method of sending the letter is mentioned, it can be sent through registered mail with acknowledgement due or email. Using registered mail or email allows a party to have a record that written notice of termination was sent in the event of any future dispute.

The employee can be asked to acknowledge the letter by signing and sending it back. It may not be necessary in all cases for the employee to sign and confirm the terms of the letter. However, acceptance by the employee creates a legally binding document for both parties.

Which documents should be attached to the Letter of Termination of Employment?

Any supporting document, including the following, can be attached along with the Letter of Termination of Employment:

• The copy of the original employment agreement.
• Documentation of breaches or reasons for termination.
• Record of previous communications regarding any breaches or termination.
  

What must a Letter of Termination of Employment contain?

The Letter of Termination of Employment must include:

• Parties information: Name and details of the employer and employee.
• Details of the original agreement: Details of the original employment agreement.
• Reason for termination: A clear and detailed explanation of the reason for termination.
• Effective date: When the termination will take effect (it can be either the date of the letter or some other date mentioned in the letter).
• Next steps: Any required actions post-termination, such as return of goods or payment of dues.

Which laws are applicable to a Letter of Termination of Employment?

The termination of employees will be subject to the contract of employment as well as the relevant State Shops and Establishments Act or the Industrial Disputes Act, 1947.

The general principles under the Indian Contract Act, 1872 will also be applicable.

In some cases, it is mandatory to provide a notice period of a certain number of days and compensation for severance.

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