How to Terminate an Employee or Contractor

Before You Begin: Your Role in the Termination Process

Ending a working relationship is never easy, and we're here to make the process as smooth and straightforward as possible. When the time comes, you as the client will be the one to speak directly with the employee or contractor, but because Toku is the legal employer of record, we'll need to be involved from the start to make sure everything is handled correctly and compliantly. Please always give Toku at least 2 weeks notice before you plan to terminate.

🔒 Your termination submission in Toku is confidential: Once you submit a termination request in Toku, the platform will not notify the employee or contractor until the approved termination date and time has passed, so there's no risk of accidental disclosure.

⚠️ Important: Termination is not in effect until submitted in the Toku platform. Verbal communications, emails, or direct conversations with an employee, do not initiate the termination process and do not start any contractual or statutory notice period. Toku cannot take any action to terminate an employee's contract until a formal termination request has been submitted through the platform.

Your financial obligations continue until the process is properly completed. Under your Professional Services Agreement with Toku, you are responsible for all termination-related costs, including notice pay, severance, accrued leave, and applicable fees, for the full notice period required by the employee's contract and applicable local law. These obligations run from the date valid written notice is served by Toku, not from any earlier informal communication. Costs are not capped by the deposit held on file.

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Why you need to loop us in early

Toku needs to be part of the process from the beginning, not brought in after the fact. This is because every country has its own labor laws, and every employment contract has its own terms, there's no one-size-fits-all approach. The type of termination (voluntary resignation, performance-based, redundancy, etc.) directly affects the notice period, severance obligations, and required documentation.

If there are any performance issues, warnings, or disciplinary actions leading up to a termination, these should be reported and documented with Toku along the way. As the legal employer, we need a record of these to ensure you're protected.

⚠️ Do not communicate a termination decision directly to the employee before submitting your request to Toku. As the legal employer of record, Toku is the only party legally authorised to serve notice of termination on an employee. In many countries, including Germany, a termination notice must be in written form, signed by the employer, and delivered individually to the employee to be legally valid. A verbal announcement, group presentation, or informal communication does not satisfy this requirement and has no legal effect as notice. If you communicate a termination decision to an employee before Toku has been properly engaged, you may still be responsible for the full notice period and associated costs from the date valid written notice is eventually served.

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How to start the process

Begin by submitting a termination request directly in the Toku platform (see steps below). This creates a private ticket with our Customer Success team and kicks off the review. From there:

1. Toku conducts a full review — we assess the applicable country regulations, contract stipulations, and termination type to make sure everything is handled correctly.
2. We provide a full cost breakdown and prepare the correct termination documentation (e.g., a Mutual Termination Agreement or the country-specific equivalent).
3. You approve the documents, and Toku handles the rest - signatures, final payments, benefits de-registration, and any required local filings. Your submission and all related communications stay completely private until Toku approves the termination and the scheduled date and time have passed.

Questions or unsure where to start?

Reach out to us at [email protected] — we'd rather be involved early than have to unwind a situation later.

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Whether you're offboarding an employee or a contractor, the steps below walk through what happens after you've submitted your request. Since Toku is the legal employer, always loop us in as early as possible [at least 2 weeks], termination timelines and requirements vary significantly by country.

Follow the steps below based on the worker type.

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Terminating an Employee

Step 1 - Submit a Termination Request

Head to the employee's profile on the Toku platform and click "Terminate Employee." Fill out the required fields and submit. Our team will review your request and follow up within 48 hours to acknowledge and confirm next steps.

Step 2 - Termination Documentation

Once your request is reviewed, Toku will prepare the appropriate documents based on the termination type:

• Voluntary Resignation: Toku will prepare a termination notice and share it with you for review and approval before anything is sent to the employee.
• Involuntary Termination: Toku will prepare a termination notice and, if applicable, a severance agreement. All severance agreements are reviewed by our legal counsel to ensure compliance with local labor law and any contractual obligations in place.

💡 Heads up: If the severance amount exceeds one month's pay, Toku will issue an invoice to pre-fund the employee's final payment before processing.

Step 3 - Final Steps

Once you've approved the documents, Toku will take it from there:

• Documents are sent to the employee for signature via DocuSign.
• The employee's status is updated to Inactive on the Toku HRIS platform.
• Toku processes the employee's final payment after documents are signed.
• The employee is de-registered from any local benefits plans in a timely manner.
• Year-end tax documentation for the terminated employee will be made available on the Toku platform at the applicable time
• All signed offboarding documents are saved in the employee's folder - you'll receive a notification once everything has been uploaded

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Terminating a Contractor

Step 1 - Submit a Termination Request

Head to the contractor's profile on the Toku platform and click "Terminate Employee." Fill out the required fields and submit. Toku will review your request and approve or reject it within 48 hours.

Step 2 - Termination Documentation

Toku will prepare and issue a termination notice to the contractor to officially memorialize their termination date.

Step 3 - Final Steps

Once the termination notice has been signed, the document will be saved to the contractor's profile and you'll receive a notification confirming it's been uploaded.