Resignation Letter / Relieving Letter / Termination Notice


The following information is prepared from the perspective of the employer terminating the employment contract. For termination of employment by the employee, please refer to the section under “Personal” – “Work / Employment” – “Resignation Letter”.

 

A. Termination of Employees

 

There are 3 ways to terminate the employment contract of an employee by the employer:

  1. termination by notice or in lieu of notice;
  2. termination for cause; and
  3. asking the employee to resign “voluntarily”.

 

  1. Termination by notice or in lieu of notice

Employment contract can be terminated by the employer (and also by the employee) by giving the other party due notice or payment in lieu of notice. The first thing to do is to check the notice period and other entitlements under the employment contract. The notice period starts when the employer sends a written notice letter or email to the employee clearly terminating the employment relationship and end on the last day of work of the employee.

 

Instead of notice, most employers would choose to terminate employees immediately and make payment in lieu of notice. This is to avoid the potential risk of a disgruntled employee causing damage to or even sabotaging the company during the notice period.

 

The amount of payment should be equal to:

  • any outstanding salary;
  • remuneration the employee is entitled to receive during the notice period;
  • any payment in lieu of any unused annual leave in proportion;
  • any pension or long service payment and
  • any severance payment.

 

  1. Summary Dismissal

Employment contract can be summarily dismissed (i.e. termination for cause without notice or payment) if the employee has committed certain serious offences in connection with the employment, for example:

  • wilfully disobeys a lawful and reasonable order;
  • gross misconducts;
  • fraud or dishonesty; or
  • has a habit of being neglectful or negligent in relation to his / her duties.

It is generally not lawful for an employer to dismiss an employee for taking part in a strike without any notice of payment in lieu of notice. Summary dismissal should be reserved for an employee who has committed a serious breach, misconduct or has serious performance issues after repeated warnings from the employer. It is a serious disciplinary action and should not be used lightly, otherwise the employer may risk facing unfair dismissal claims from the employee.

 

  1. Restrictions on Termination of Employment

In most common law jurisdictions, there are certain statutory restrictions on termination of employment contracts that employers must follow. In particular, employers shall not dismiss employees under the following circumstances:

 

Pregnancy – an employer must not dismiss any woman under maternity who has given notice of pregnancy.

 

Sick leave – an employer must not fire an employee who is on paid sick leave.

 

Whistle-blower – an employer must not dismiss an employee for providing evidence or information to a regulator or authority pending any litigation or investigation relating to the violation of laws.

 

Union activities – an employer shall not dismiss an employee for membership or activities in relation to a trade union.

 

Work-related injury – an employer must not dismiss an injured employee before signing an agreement to receive employee compensation in relation to the work injury.

 

Discrimination – an employer shall not dismiss an employee on the basis of race, religion, or employee gender.

 

  1. Termination vs Resignation

There is a fine line between termination and resignation. The person being terminated are frequently being asked to resign to save face. The difference between resignation and dismissal can be very noticeable, especially in the calculation of severance and when applying for the next job.

 

The main difference between termination of employment and resignation is who initiated the termination of employment. Resignation refers to the voluntary departure of employees. Termination means that the employer decides to terminate the employment relationship. It is also known as dismissal, firing, or laid off. This line is frequently blurred when an employee is asked to resign after unsatisfactory performance or other work-related issues (e.g. misconduct or harassment).

 

As per the above, employers may provide some form of compensation payment in lieu of notice and severance pay to compensate for the dismissal of an employee. Severance pay allows employees to keep some cash reserves during the end of their work and looking for new work.

 

When an employee resigns on a voluntary basis, he / she is still entitled to receive normal compensation until the last day of employment. However, the employee may not be entitled to any severance, and may not receive the full pension from the employer. In addition, if the employee is entitled to shares or share options from the company’s shares scheme, the shares or options may not fully vest if the employee chooses to resign as opposed to being dismissed.

 

Whether the employee should submit a resign letter depends on the relative bargaining position between the employer and the employee. If the employee has committed a serious disciplinary breach that can result in dismissal, the employee would not be entitled to any compensation anyway and may choose to resign to avoid being questioned by the next potential employer.  In any case, the employee can negotiate with the employer on getting the same compensation, benefits, and vesting of shares as a dismissal when being asked to resign.  

 

 

B. Resignation Letters

 

Please note that the resignation letters in this section relate to formal resignation from the official positions of the company. For general resignation letters from employees, please refer to the "Resignation Letter" section under the "Personal" – “Employment / Work”.

 

 

C. Relieving Letters

 

A relieving letter is an official letter sent to an employee when he / she leaves the company. The relieving letter formally accepts the resignation of employee (whether or not voluntary), and provides for the settlement amount by setting out the following: (i) any outstanding salary; (ii) remuneration the employee is entitled to receive during the notice period; (iii) any payment in lieu of any unused annual leave in proportion; (iv) any pension or long service payment and (v) any severance payment.

 

The relieving letter is usually sent by the Human Resource or the manager of the employee. Although it is intended to be a full and final settlement with the employee, it does not require the signature of the employee. By accepting the payment (usually in the form of a cheque enclosed with the letter), the employee will be deemed to have accepted the terms of the relieving letter.

Keywords:

Resignation Letter

;  

Relieving Letter

;  

Notice Letter

;