What is a Termination Letter (Payment in lieu)?
A Termination Letter (On notice or payment in lieu) is issued to terminate the services of an employee, foregoing their notice period by paying salary in lieu of notice.
How to create a Termination Letter (Payment in lieu)
Easy to Use Legal Templates
Quickly and easily create any legal agreement for you or your team.
Straightforward pricing plans and bespoke packages built to simplify all your legal demands.
Vast Document Library
Zegal’s comprehensive collection of agreements means you always have what you need at your fingertips.
Typically, you’ll use a termination letter payment in lieu when you want to end the term of employment with an employee. Generally, terminating an employee is among the least favorite processes in human resources. Additionally, it is even more fraught with risk if it is due to poor performance. Essentially, you should write a simple termination letter to ensure that you protect the employer from any risk of legal action. Therefore, the less specifics that you provide in the letter, the less likely that a distraught employee can use that specific reason to challenge the termination. Basically, by not supplying a reason for termination, the company can use any and all evidence to defend itself.
What is in a Termination Letter (payment in lieu)?
In general, you should keep a termination letter short.
Date – Specify the date when this letter was delivered.
Last Date of Employment – Provide information on the last working day for the employee. Ensure that the last date of formal employment adheres to both the applicable employment laws and the actual employment contract signed by the employee.
In many companies, the employer will provide the employee with various company resources to perform their daily duties. Usually, these may include laptops and cell phones; access to online accounts and resources; and other IP that belongs to the company that needs to be returned.
Employer Responsibilities for Termination Letter (payment in lieu)
Essentially, the company will also need to list out any liabilities owed to the employee. Such as paying out remaining holidays and meeting other statutory requirements.
When Should You Use a Termination Letter (Payment in lieu)?
Ideally, you should always use a termination letter as a formal method of documenting a dismissal. Whether it’s for poor performance or other reasons, ensuring you protect the company’s interests is the most important priority. In essence, a formal termination or dismissal letter serves as a formal notice and historical record of the termination.
If the termination is because of the cause or poor performance, make sure to follow proper procedures.
What is the meaning of payment in lieu of notice?
PILON or Payment in lieu of notice means that during a notice period, an employer will pay an employees’ salary and at times benefits too, but the employees are not required to work during the particular time period.
It is also known as wages in lieu of notice. In lieu’ means ‘in place of” or ‘instead of” and so employees receive notice pay instead of working during your notice period.
Make Sure to Follow Procedures for a Smooth Transition
Before dismissing an employee, it is important to follow proper procedures. Firstly, ensure that you issue the proper warnings before the employee is formally terminated. In most jurisdictions, an employee must be given adequate notice of poor performance and the chance to rectify the behavior before termination. However, if attempts have been made but with no improvement, make sure that you collect proper documentation before holding a meeting to dismiss the employee.
Secondly, always perform the dismissal in person. And then either send the letter via email or hand it to the employee at the meeting. Having a signed version of the letter ensures that there is written proof that the employee has read and understood the termination.
In summary, always use a termination letter payment in lieu as a formal means of dismissing an employee. Keep the letter short and simple. Ensure there are not a lot of specifics so the company can provide broad enough evidence in case the employee files legal action. Finally, termination is never easy. Be cordial and offer to help the employee during the transition process.
You Might Also Like
Along with this document, make sure you see these other templates in our library:
- Shareholder Agreement
- Option Agreement
- Employee Option Repurchase Agreement
- Share Appreciation Rights Plan
- Share Option Plan
The Zegal Template Library
Zegal's template library is a list of essential and premium business templates for your everyday legal needs.
Save money and time without sacrificing quality or missing vital legal requirements. Whether you're a startup or a larger enterprise, Zegal lets anyone create a legal agreement.
Let us take care of the legals so you can focus on running your business.
If you need more help, our "Talk to a Lawyer" feature gives you access to a qualified lawyer to get all the expert advice you need.
Try it for free today!
Ready to get started?
Create a free account now and explore all of the Zegal features.
No credit card required
Choose from 1000+ legal templates and draft contracts with ease and confidence.
Contract and document management made easy.
Pay As You Go
Nice things people say about Zegal.
"Using Zegal allows us to take a lean and efficient approach that cuts costs while maximising results."
"Zegal is easy to use and customer service is responsive and helpful! I strongly recommend it!!"
"Zegal makes onboarding a new client or employee fast and simple."
“Zegal really works well for all our legal documentation needs, and it is also user-friendly and mobile at the same time.”
Daniel W. Ho
Managing Director & Principal Consultant
“Zegal is like my teammate, helps me draft the right template, quickly gets my work done, and also saves me money on legal needs.”
CEO & Co-Founder
“With colleagues, partners, and clients across the globe, Zegal provides an easy-to-use tool that streamlines processes that saves costs and time.”
CEO of Turnkey
“Zegal has been such a great help in my business operations.”
Amanda A Atan
Managing Director at VIBES Mastery
“With Zegal, we work smarter rather than harder. Being a business professional, a proper document management system is always a must.”
“Zegal, a platform for compact package of legal templates, secured e-signing, reasonable cost and high level customer service.”
“Zegal is easy to use, affordable and the platform is simple to navigate which makes the process of putting together a document fast and fuss-free.”
Founder & Managing Director
“Love the new flow/design, very quick and easy to use now. I have done 2 or 3 customer contracts in a flash over the past 2 days.”
General Manager and Managing Editor
“Consistently positive experiences with Zegal’s technology, and customer services teams, who ensure that our issues or questions are responded to immediately.”
CEO of Turnkey