Employment Termination Letter

An Employment Termination Letter is a document that is given by the employer to the employee informing him of the fact of his dismissal or termination of his employment. This document shows the decision to dismiss such employee and the reasons for the same.

Other details that the former employee should know are the information concerning the last paycheck to be given and the separation benefits if any. Termination may either be caused by an act or offense on the part of the employee, or by reason of a management prerogative on the part of the employer. There are two general reasons for the termination or dismissal of an employee, it may be due to Just Causes or Authorized Causes. It must be noted that if the reason for the dismissal or termination originates from the employee, it is a just cause, while if it originates from the employer, it is an authorized cause.

Just Causes

If the employment termination is due to the acts of the employee, this may mean that the employee has committed a particular act that caused damage to the employer or is considered by the employer as a valid ground for employment termination. This is most commonly known as a just cause for employment termination. For instance, if an employee takes company property without consent or against the will of the employer, this is a just cause or a valid ground for employment termination.

The following are the just causes for employment termination:

• Serious misconduct or willful disobedience exists if the cause for employment termination is by reason of willfully disobeying the orders of the employer, or causing an act that is considered to be serious misconduct.
• Gross and habitual neglect of duties exists if the cause for employment termination is by reason of excessive tardiness, or repeated absences without leave.
• Fraud or willful breach of trust exists if the cause for employment termination is by reason of an act on the part of the employee in breaking the trust reposed upon him by the employer. This may also include fraudulent acts such as lying or stealing company property.
• Commission of a crime or offense exists if the cause for employment termination is by reason a felony or an offense punishable by law, committed by the employee(s) in connection with his duties.
• There may be analogous circumstances that are also considered as just causes for employment termination such as the violation of an employee of company policy.

Authorized Causes

If the termination is by reason of an exercise of a management prerogative on the part of the employer, this may mean that the employer is experiencing some financial burden which left him no other choice but to let go of the employee such as in the case of retrenchment or business closure. Other reasons for laying off employees may be redundancy, such as when the position of the employee is no longer giving benefit to the employer, or implementation of labor-saving devices which make the position of the employee unnecessary. There are also cases where the employee needs to be terminated because of health reasons, such as when the health condition of the employee renders him incapable of performing his duties. These are also called authorized causes for employment termination.

The authorized causes for employment termination are further defined below:

• Retrenchment means the employer is experiencing economic and financial distress which left him no other choice but to let go of the employee or group of employees.
• Redundancy means the position that the employee is holding has been declared redundant and not causing any material benefit to the employer, or such position is in excess of what is needed by the employer.
• Business closure means that the termination of employment is brought about by the closure of the employer's company or business.
• Installation of labor-saving devices results in the dismissal of the employee due to new technology that renders his position inutile.
• Health reasons may also be an authorized cause when the illness of an employee renders him incapable of performing his duties.

Giving the employee a Termination Letter is giving him due process by informing him of the facts surrounding his termination, and the duties and responsibilities of both the employer and the employee after the fact of termination.

How to use this document

The Employment Termination Letter shows the decision of the employer in dismissing the employee, the grievances of the employer against the former employee, and the specific reasons or grounds for the termination. The details concerning the employer should be included, the name of the employee terminated, and the signatory of the letter which usually comes from the human resource department of the employer.

The details of this letter may depend on the type of termination, if it is caused by the acts of the employee, the narration of how the employee committed the act which is considered a just cause or a valid ground for termination, must be included.

In case the termination is considered as a layoff or if there is an authorized cause for termination such as retrenchment, redundancy, business closure, and other similar causes, the details surrounding the same may be included.

The following details may also be included in this letter:

• The final paycheck to be given to the terminated employees which includes the unpaid wages and allowances,
• Other benefits to which the employee may be entitled,
• Reminders concerning certain restrictions such as that of a Non-disclosure Agreement or a Non-Compete Agreement,
• Contact Details of the employer or his representatives, and
• The option to set a date for an exit interview.

After completing the letter, it must be signed by the person who will send it, and a copy must be kept after sending it to the employee terminated.

Applicable Law

The Labor Code of the Philippines is the law that governs employment termination in the Philippines. The Department of Labor and Employment also issues Department Orders to implement the laws found in the Labor Code and sets the daily minimum wage rates.

The general rules on contracts and obligations found in the Civil Code of the Philippines also apply.

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