How Do You Draft a Sensitive Termination Letter for Senior Employees Facing Layoffs?

We are facing a tricky situation where the management is thinking of terminating a few senior-level employees. The reason is a mix of non-performance plus the financial situation of the company, which may not be able to bear the burden of all highly salaried employees.

From my experience in such situations, the employee is asked to agree to a voluntary resignation with the due notice period. However, I have been asked to draft a letter as well. This is where I need help. The standard termination letters usually cite reasons such as non-performance, misconduct, etc., but this one is different.

Let me know if anyone has a format of this nature. Even a redundancy letter format would suffice.

This requirement is a little urgent.

Voluntary Resignation for Senior Employees

It is always better to ask those senior employees to give voluntary resignation so that they leave the organization with due respect. Otherwise, extremely difficult business and economic situations can be the grounds for retrenchment.

Regards,
Kamal

It is called retrenchment, not termination. I think the head of the department can talk with them about the financial situation of the company and also inform them that their services are no longer required. Please suggest submitting a mutual resignation and assure them that in the future, if needed, they can be called back.

Alternatively, inquire about taking a long leave without pay, as the company cannot afford their salaries in the current situation. Many of them may be willing to resign automatically.

You can also directly inform them:

This is to inform you that you were appointed as Assistant Manager C.S in the Customer Services department of our company effective from 7th Feb, 2011. However, due to irregularities in punctuality and negligence of duty on your part, management has decided to terminate your services as of 30th June, 2011.

Your services are terminated with immediate effect. Please collect your dues from the Account Department.

Thank you.

Such issues should be handled with more sensitivity and concern for people, rather than in a routine manner. Your senior employees have given their best for the organization; now terminating their services unilaterally on the basis of non-performance - is it justified? If it's on account of the financial conditions, then this should be communicated in a befitting and transparent manner.

Warm regards.

Termination Notice

Ref: Our appointment letter dated 12/03/2011

It has been observed by the Management that your performance is not up to the mark. Hence, your services are not required by the Management. As per Clause 09 of your appointment order dated 12/03/2011, either party should give one month's notice for terminating the services. Accordingly, the management issues two months' notice, and you will be relieved from our services with effect from 30/06/2011. Please make a note of it.

Regards,
For Pyoginam Manager (P&A)

I fully agree with Mr. Raj Kumar Hansdah; such a critical matter should not be handled in a routine manner.

Regards,
Kamal

Imagine yourself in their place and then think; being in HR, it's your responsibility to handle this case with more sensitivity, as suggested by Mr. Raj Kumar. Just writing a letter and handing it over to them? No, they should be sent in a dignified manner.

I appreciate all the advice given here. I myself am not in favor of any letters; however, I have been asked to prepare one just in case. I have penned down something like this:

"This is further to our meeting with regards to / you are already aware of the financial constraints that the business is facing. For various reasons, both external and internal, we have not been able to meet our projected revenue targets. In the wake of the current and future prospects of the business, the management has decided to rationalize its activities and expenses through various means, including a reduction in headcount.

After a comprehensive analysis of the manpower utilization and individual performances, the management has decided to relieve you from the services of the organization with effect from <date>, giving you one month's notice as per your employment contract.

It is with regret that management takes this action but has no other choice."

Please let me know if this may have any legal implications. Does it sound like retrenchment and therefore call for some additional compensation? In fact, what are the legalities around retrenchment in the service sector?

What Raj Kumar, Pon, Archna, and others have said is right—handle with an extra dose of finesse in such matters. Please desist from putting this issue/request in writing from the company's end. I suggest taking time for a meeting with each of them and going to the cabin/room of each senior employee to talk it out—the final request being the resignation from each of them. Make it a one-to-one meeting—never try to handle all (even if it's two) of them together for such discussions.

By this gesture, you will be introducing the 'personal/human touch' into the whole issue and also take the opportunity to clarify any concerns each of them may raise face-to-face. Additionally, ensure you preempt any ideas by any of them to go the legal way later on. One can never assume human responses in such traumatic conditions until the situation evolves, and then it could be too late for you to make any course corrections from your end.

Regards,
TS

Thank you for all the advice. This is what I have suggested to the management. However, I am still waiting for an answer on the legalities involved with retrenchment.

Dear Anuradha, Thanks for your response. While agreeing with Pon's opinion that "Companies are at liberty to downsize. No legal complications if all the benefits due to them are settled," as far as the legalities are concerned, I would still suggest that human resources, especially seniors who have given their best and who shall need much more time to "rehabilitate" themselves (as the positions at their level are few and far between and also require a lot of lead-time by the recruiters and the company management), should not be treated as 'disposable diapers'—to be thrown away once the purpose is over.

Steps to Handle Downsizing with Care

The best you can do under such circumstances would be the following:

- Ascertain the numbers; whether you can deal with them collectively or one-to-one.
- Fix up a meeting with your senior management—MD/group of Directors—in an informal environment.
- Convey the financial status, measures, and downsizing proposal.
- Give them ample time even after the notice period is over, which can be on an LWP basis, so that their continuity of service is maintained.
- Help them in their rehabilitation in other companies; use your own professional network or your friendly placement consultants.

The above will not only give you the satisfaction of excelling in your job but also the blessings and friendship of the affected employees and their families.

Always remember that HR's job is much more than what is spelled out in the job description!

Warm regards.

Legalities of Terminating Senior-Level Employees

I endorse the views expressed by Mr. Raj Kumar. The ID Act provides legal remedies only for non-managerial employees, so these senior-level employees are out of the purview of the ID Act. However, for managerial employees, legal remedies are available under civil laws. Such types of removal or termination can also be challenged in civil courts if all benefits due to them are not settled. Reinstatement is not possible. Instead of reinstatement, they can claim damages and compensation.

Regards,
Kamal