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Pink Slip

What is a Pink Slip

According to Merriam Webster, Pink slip is a notice from an employer that a recipient's employment is being terminated. It is a vernacular term that refers to a notice of dismissal given to an employee. As discussed, it is an official notification that the worker's position has been eliminated or that the worker's services are no longer required. In other words, the word stands as an informal name for a termination notice.

Breaking Down Pink Slip

A pink slip notifies an employee that he or she has been laid off or fired. The term can also be used as a verb, as in "I was pink-slipped Friday and no longer have a job." Pink slips can be handed out individually or collectively, as with large layoffs and company closures. During the Great Recession between 2007 and 2009, retrenchments were common in the financial services sector, and many investment bankers feared they would receive a pink slip during this period. Employees who are issued pink slips may hold pink slip parties where guests are served pink champagne, pasta in pink sauce, and pink-frosted cake.

Issuance

The Fair Labor Standards Act (FLSA) does not require employers to issue a pink slip to terminated at-will employees. Employers have the right to terminate an employee for any reason, provided it’s not for discriminatory reasons, such as age, gender, race or sexual orientation. For instance, poor performance is an acceptable reason to terminate an employee. Certain circumstances, however, do require a pink slip to be issued. The slip must be given to an employee who is terminated while under contract and is part of a collective bargain agreement or a union. Although not legally required in most circumstances, many employers decide to issue a pink slip to formalize the employee’s termination.

Pink slip can also be considered as an informal term for a termination letter. There are two types of termination that are voluntary and involuntary termination

Involuntary termination means that an employee is terminated by the employer due to any justifiable reason. They are dismissed, fired or laid-off from the company. The reasons for an involuntary termination can be many like-

  • Noncompliance
  • Underperformance
  • Incompetency
  • Unacceptable behaviors
  • Layoffs 

In the case of an involuntary termination, employers are required to fill a termination letter to the employee.

Voluntary termination, as the name suggests is when an employee makes a voluntary decision to leave the company. The reasons might be uncontrollable by you or may even be uncontrollable by them. The various reasons can be

  • Better opportunity
  • Personal commitments
  • Pursuing education
  • Moving abroad
  • Maternity/ Paternity and more 
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