Before telling an employee that their time is up, make sure you have a strong termination letter ready to go. Here are some simple things you should always include.

Letting an employee go from time to time is, unfortunately, part and parcel of being in HR.

An employee’s performance might not be up to scratch, perhaps they made an irreparable blunder, or tough times might call for operational cuts.

Whatever the reason, when it comes time to terminate their employment, you need to be prepared with a formal and legally defensible dismissal letter.

HRM speaks with David Wurth, Principal and Founder of Wurth HR, to find out the must-haves in a dismissal letter.

Gearing up for a tough conversation

Before issuing a termination letter, communicating your decision with the employee – either in a face-to-face meeting or on a video call if employees are working remotely – is an essential first step.

The recent case of Petersen v Allpet Products underlines the importance of verbally communicating a termination before the employee is handed a dismissal letter.

Although the FWC found that the dismissal was unfair because the employee didn’t consider the impact of the pandemic on the employee’s ability to complete their work, and noted the difficulty in assessing underperformance, the judge also noted the absence of communication. 

The employee was informed of her dismissal by email, without any prior meeting or phone call.

Just this week, Wurth encountered a similar scenario when he was advising a client on how to dismiss an employee.

When the client asked whether this could be communicated over the phone, Wurth recommended a video call instead.

“Over the phone is ok but definitely not by text, and definitely not by email. There needs to be a voice somewhere, and preferably a face as well,” he says.

In a dismissal meeting, Wurth says you should also consider: 

• Suggesting the employee bring a support person, regardless of whether the meeting is being conducted in person or over a video call, so that the employee has someone on their side to lean on for emotional support.
  
  “It’s not a legal requirement to offer this, but it can look better at the FWC if you have at least made the offer,” says Wurth.
  
  Giving the employee 24 hours notice of the meeting will allow them time to find a support person.
• Mentioning termination within the first 30 seconds: “The decision that’s been made should be the first thing that’s covered – as in, ‘Your position has been identified as surplus to requirements, and unfortunately your employment is being terminated.’
  
  “I tell managers to practice saying these words before the meeting… In the first 30 seconds of the meeting, the word ‘termination’ needs to be used. I know that’s harsh, but some people spend way too long on salutations and trying to make the employee feel at ease.They are never going to feel at ease. The more you do that the more horrible they will feel because the manager’s body language is usually dissonant with what they are saying.”
• Encouraging the manager to do the termination. “Some HR managers will take this on board because the manager doesn’t want to do it themselves. They’ll be at the meeting but they don’t want to utter the words, ‘You are being let go’. I push back on that. It’s the manager’s job, and it’s our job as HR to coach managers in doing that.”
• Outlining the reasons for dismissal. Wurth also advises not going into detail, because once the person hears they have lost their job, they aren’t going to listen for much longer. You can save the details for their termination letter.

Basics of termination letter writing

Although the specific elements of a dismissal letter will differ depending on the reason for termination, there are a few foundational elements to tick off including:

• Follow the same basic structure. Wurth advises adhering to the same three-stage structure for every dismissal letter. The letter should start by outlining the employee’s contract is being terminated, explain the reason(s) for termination, and finish with a short section on next steps.
  
  “I tell managers that if they want a script for their meeting, use the letter as a script. I tend to write them as though a meeting is happening, and this is the written version in front of them.”
• Keep it formal and to the point. “Keep it short, a page and a half should be the absolute max.” Some managers will also add their contact details at the end of the letter to bring in the human element, soften the blow, and lend a hand to the employee in case they need support down the road.
• Have your paperwork ready to go. “You need to have a letter there and then… I don’t think the meeting should be followed up with anything, and that’s for all sorts of terminations, whether it’s dismissal due to poor performance, misconduct, retrenchment, or otherwise,” says Wurth.
  
  He adds that the company should  have made a decision on the employee’s last day of work, and ensure that’s  included in the letter.
  
  If termination is made over a video call, Wurth’s advice is to send an email with the dismissal letter as soon as the meeting ends.
• Have the manager sign the letter: “The HR person can be mentioned in the letter as a point of contact, but that’s it – don’t have the letter signed from them,” says Wurth. “The letter is from the company, and the manager is the one who is representing the company.”
  
  He acknowledges there are many organisations that would have it signed by HR, but his view is that this indicates the manager is “not taking responsibility and blaming HR”.

The Fair Work Ombudsman offers a range of helpful templates for writing a termination of employment letter.

Following these basic principles will help to ensure your company’s reputation remains intact and, most importantly, protect you from a potential unfair dismissal claim.

If you need to have a difficult conversation at work, AHRI’s short course can help you get prepared. Book in for the next session on Having Difficult Conversations on 19 November.