A Contract Termination Letter is also known as Employee Termination Letter, Pink Slip, or Letter to Fire an Employee. It is a document that explicitly explains the reasons why one party proposes to break up an existing business relationship. Things that become the reasons to create a Termination letter are the terms and conditions that have been approved by both parties when they make a business agreement. When one party finally decides to terminate the business agreement, there should be no surprises.
A business agreement should contain termination clauses, terms and conditions where a business agreement may be terminated. The termination clauses contain the names of the parties who are eligible to end the business relationship. A Contract Termination Letter is a legal document that enables both parties who sign the business agreement to get the best solution when a dispute occurs. It clearly spells out when and why a business relationship is dissolved.
A termination letter is a written record that can help protecting you in case there is any question or lawsuit related to the termination. You may need a termination letter if:
• Your company is terminating an employee and would like to have a legal documentation of the termination.
• You are an employee who must terminate an employee due to poor working performance.
• You are a landlord who wants to evict a tenant due to excessive disturbance caused by the tenants
• You are a tenant who wants to terminate your contract because the landlord cannot meet the request for repairs within a certain period of time.
Information You Need to Create a Contract Termination Letter
• Basic Demographic Information – You need to include the name of the person being terminated, the name of the company, the name who is handling the termination process, and date of the termination becomes effective.
• Reasons of Termination – Giving an honest reason of termination should help avoiding any question or a lawsuit. If an employee is terminated because of his poor performance, verbal abuse, or any other reason, you need to write them down clearly.
• Company Property – You need to note about facilities for employees that your company gives to the employee being terminated. Whether it is a company car or a laptop, you need to ask for it back.
• Health Insurance and Other Benefits – Explaining clearly how you are going to provide the retirement savings or health insurance to your employee in the termination letter will make the termination and transition process become much easier
You can use a contract sample below if you are looking for a reference and you don’t want to hire a legal people to create one for you. It is recommended to ask professional legal people though.