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Employee Termination- Meaning, Types, Causes, Steps, Letter

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One of the many awkward conversations for an HR Manager is giving a piece of bad news. At the peak of this list stands Employee Termination. This is the case because termination is the worst-case scenario for every worker.

It means a sudden loss of employment that is bound to cause a frenzy in workers' minds. So, as an HR, you must handle this delicate situation as gently as possible. To do this, here's a piece that will take you through all the basics you need to know about managing employee termination.

Here is the first thing you need to know.

What is Employee Termination?

Employee termination means the end of employment of a worker with a company. A departure, as such, has many causes and types.

Let's have a look at a few of these types first.

Types of Employee Termination

1. Voluntary Termination

In this type of termination, the worker takes the initiative to leave the company. A decision, as such, can be for many professional or personal reasons. For example, it could be a toxic work environment, lack of growth opportunities or employee development, personal problems, etc.

If such a termination happens for professional reasons, you may be at fault. Thus, whatever reasons it may be, it is a wake-up call for you to correct the situation for other remaining workers.

2. Involuntary Termination

Involuntary termination refers to an event wherein the employer removes a worker from employment. It can be for low performance, employee behavior, violation of company rules, etc. This type of termination can also be the result of an employee disciplinary action.

3. Employment at Will

This termination type dictates that an employer can fire a worker anywhere at any place without any reason. Here, an employer need not give any reason to the leaving employee. However, employers must document the reason for themselves to fight or prohibit any discrimination case, should it arise.

4. Mutual Termination

As the name suggests, this termination arises when both parties conclude that they are not a good fit. This type of termination is a lot less messy since it is a decision both parties agree on mutually.

These were a few employee termination types. A departure of such kinds can happen for many reasons or causes. Let's have a look at a few of these causes in our next topic.

Causes For Employee Termination

There can be many causes of employee termination from both employer and employee viewpoint. Some of these are:

From the viewpoint of the Employer:

  • Low performance.
  • Violation of Company Rules.
  • Employee Disciplinary Action.
  • Harassment of any sort, be it sexual, physical, mental, or emotional.
  • Lack of cooperation and progressive discipline
  • Leaking information to competition, etc.

From the viewpoint of the Employee:

  • Better employment contract elsewhere.
  • Lack of growth opportunities like employee promotion, etc.
  • Lack of interest in the job.
  • Studies/Business/Retirement Plans.
  • Workers with personal problems/issues.
  • Bad employment relationship.

These were some causes of employee termination.

Steps leading up to an Employee Termination

Suppose you are in a situation wherein you must terminate an employee. In that case, you must take the necessary steps leading up to the process.

1. Reasons for termination

First and foremost, you must specify the acceptable reason for termination beforehand. It includes the events in which the termination of a worker is applicable. These can be based on low performance, violation of a rule, harassment, insubordination, etc.

2. Termination Policy

After deciding on the above factor, you must have the policies in place. These policies must dictate the grounds and the procedure for termination. Here, you must get all the workers' signatures on the agreement as consent for the policy.

3. Employee Review Process

Next comes the duty of determining an employee review process. This process will help you determine whether to fire or keep a worker for further consideration. It looks for performance reviews, behavior, an initiative of the worker to correct situations, etc.

In short, it is the process that helps you decide whether firing an employee is necessary.

4. Inform the Employee

If, after the review process, you feel the worker must go, then you must inform the individual immediately. Here, you should call for a private meeting and break the news gently. Though this is not easy, it is imperative to do so as soon as possible to give the worker more time to look elsewhere.

Related Article: How to Make the Most out of Virtual Meetings

5. Severance Package

After the termination is final, you should decide on the matter of severance package. It is an unemployment compensation an employer pays to the leaving employee. These unemployment benefits can be a lumpsum payment, health insurance till some time, etc.

If your policy guidelines a severance package, then you must start the necessary procedure immediately.

6. Proper Send-Off

After all these steps are complete, you should give the worker a proper send-off. In this case, you should bid the worker farewell with constructive feedback and farewell messages. It is also vital to conduct an exit interview beforehand to get effective feedback on you as an employer.

These were the steps leading up to employee termination. Now, let's look at a basic sample letter template in the event of employee termination.

Basic Employee Termination Letter Template

(Date of Letter)

(Employee name)

With deep regret, we inform you that the management has come to a unanimous decision to terminate your employment with us. As such, your last date of employment at (company name) shall be on (date of termination/last day of work).

We came to this decision owing to the following reasons.

  • (reasons for termination)

Kindly understand that this decision is irreversible.

As per our company norms, you have the following benefits:

  • (benefits of a severance package, group insurance, etc., if any)

You are to return all the company property at your disposal on the date of termination itself. We will disburse your final paycheck on (date). If you have any further questions, then do reach out to us at the HR Department.

We thank you for your efforts at (company name) and wish you all the best for your future.

(Name of the person mitigating the termination process)


Termination is one of the most dreadful moments in professional life. It is what a worker fears the most, so it is expected that termination will stir emotions. As an HR, your job is to ease up the process as much as possible.

To handle this process swiftly, we hope you got a better understanding of employee termination today.

This article is written by Jyoti Prakash Barman. He is an in-house Content Marketer at Vantage Circle with interests in music and automobiles. For any related queries, contact editor@vantagecircle.com

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