Picture this. You’re a time-strapped middle manager. After a series of passive-aggressive jabs between your department head and a direct report, you’re given one mission:
Get this person out.
Unfortunately, you don’t have the authority to decide how that mission should be achieved. The instructions from senior management are firm:
- Take her out to lunch
- Tell IT to revoke access to her PC
- When you get back to the office, tell her she's fired and ask for her key
Suffice to say, the situation is just as bad as you think. (Hands down, the most awkward lunch ever.)
So, yes. There is a right and wrong way to fire someone. And if you’re like most red-blooded human beings, you’re probably wondering how you're going to terminate this relationship nicely, without humiliating the employee.
While firing someone is never fun, you can still keep it human — even right down to the formal termination letter. Here’s how.
Table of contents
- What is a termination letter?
- 3 termination letter templates
- How do you write a termination letter?
What is an employee termination letter?
A termination letter is a letter from an employer to an employee to officially inform them of the decision to end their employment contract. It outlines the reasons for termination, relevant details such as the effective date of termination and final pay, and may also include information on severance pay, benefits, or any other key information.
If you’ve never done it before, you might be surprised to find out that every termination requires an official notice of termination — even if you've already informed the employee verbally. The reason for this, as you might expect, is legal.
A letter of termination gives you a documented paper trail in the unfortunate event of a lawsuit. A standard termination letter will:
- Confirm the reason for termination
- Provide receipt of company property
- Give the employee any pertinent info as their time at the company comes to an end
The most common types of termination letters are:
- Termination letter due to layoffs/downsizing
- Termination letter for cause (misconduct/poor performance/attendance, etc.)
- Termination of business contract
Note: The information in this article is not legal advice. To reduce your risk as an employer, always check with your legal team before terminating an employee contract.
3 termination letter templates
The following sample termination letters can be customized according to your needs.
Simply copy/paste the below templates and customize the blanks with the details that make the most sense for your current situation.
Remember to send the letter to your legal team for sign-off before you send it to anyone else.
1. Termination due to layoffs or downsizing
[Employee Name and Address]
Subject: Termination of Employment Due to Downsizing
Dear [Employee Name],
It is with deep regret that I must inform you that your position at [Company name] is being terminated.
[Explain the reason for the layoff or downsizing clearly and concisely. For example, “Due to the economic impact of the COVID-19 pandemic, the company has been forced to make difficult decisions to reduce costs, including downsizing the workforce”.] Unfortunately, this means that we can no longer continue your employment with us.
This has been a difficult decision for us as a company, and we want you to know that your contributions to our organization have been valued and appreciated. Your work has been exemplary, and we recognize the impact that your departure will have on both yourself and the company.
[Detail any severance package or benefits that the employee is entitled to. For example, “As a gesture of appreciation, we would like to offer you a severance package of [amount] that includes [other benefits like medical insurance, compensation for unused vacation time etc.]].
We will also be glad to provide any assistance we can to help you during this difficult time. Our human resources department will be available to answer any questions you may have and guide you through the process.
Please let us know if we can assist you in any way.
Thank you for your dedicated service to our company. We would like to wish you all the best in your future endeavors.
2. Termination letter for cause
[Employee Name and Address]
Subject: Termination of Employment
Dear [Employee Name],
I am writing to inform you that your employment with [Company name] is being terminated due to [state the specific reasons for termination, providing clear and factual explanation of the cause for termination].
We have carefully considered the issues at hand and have conducted a thorough investigation, including discussions and warnings given to address the concerns. Despite these efforts, it has become evident that your performance/behavior has not improved, and the negative impact on the company's operations and work environment is unacceptable.
[Provide details of any previous warnings, performance improvement plans, or corrective actions taken. For example, "As you are aware, you were previously counseled on [specific issues] on [dates], and you were given a written warning on [date] regarding [specific misconduct]. On [date], we implemented a performance improvement plan, but unfortunately, the desired improvements were not achieved."]
Based on [Company name]'s policies and the employment agreement you signed, we have determined that termination of your employment is the appropriate course of action. Your last day of work will be [specific date, complying with any legally required notice period or contractual obligations].
[Include any instructions regarding return of company property, access to company systems, and any final paperwork required.]
We understand that this is a difficult situation, and we strongly encourage you to take this as an opportunity to evaluate your actions and make necessary improvements. We wish you success in your future endeavors.
Any outstanding compensation, including payment for accrued vacation days, will be processed according to [Company name]'s standard procedures and will be provided to you in your final paycheck.
Please note that our company retains the right to provide truthful employment references to any future prospective employers if requested.
Should you have any questions regarding the termination process or the specific reasons for your termination, please contact [Human Resources contact person] at [contact number/email address].
3. Termination of business contract
[Recipient's Name and Address]
Subject: Termination of Business Contract
Dear [Recipient's Name],
We regret to inform you that we have made the difficult decision to terminate our business contract with [Recipient's Company Name]. This decision has not been taken lightly, and we understand the potential impact it may have on both our companies.
After thorough evaluation and consideration of various factors, including [briefly explain the reasons for termination, such as changes in business strategy, market conditions, or performance issues], we have concluded that it is in the best interest of our company to terminate our contractual agreement.
We want to express our sincere appreciation for the partnership and collaboration that we have shared throughout the duration of our business relationship. We value the contributions you have made towards our mutual success and acknowledge the efforts your company has made to fulfill its obligations under the contract.
In order to ensure a smooth transition, we are committed to working together during the termination process. We propose a mutually agreed-upon plan for winding down our business activities and resolving any outstanding matters. Our team will be available to discuss the necessary steps, address any questions or concerns you may have, and negotiate an amicable resolution.
We understand that this decision may impose significant challenges for your organization, and we genuinely regret any difficulties it may cause. It is our hope that we can mutually find suitable alternatives or explore opportunities for future collaboration in different capacities, if appropriate.
We kindly ask that you initiate the necessary actions to terminate any ongoing commitments or services as per the terms outlined in our contract. Furthermore, we appreciate your cooperation in settling any outstanding financial matters, including invoices or pending payments.
We genuinely value the positive working relationship we have established, and we would like to express our gratitude for the trust and confidence you have placed in our company. We sincerely wish you and your team success in all your future ventures.
Should you require any further clarification or wish to discuss this matter in detail, please do not hesitate to contact our representative, [Your contact person], at [Your contact details].
Thank you for your understanding and cooperation in this matter.
How do you write a termination letter?
Whether you choose to follow the above sample termination letters or create your own, the steps for writing a termination letter are almost always the same.
Step 1. Gather all the necessary details before writing the letter
While it’s not nice to think about, your termination letter could end up being used in court one day.
Before you do anything else, take time to gather all relevant dates and documentation including:
- Employment contract
- Company policy
- Performance appraisals
- Details of previous warning
- Performance improvement plans
- Non-disclosure agreements
- Non-compete agreements
- Details of any severance packages
- COBRA Continuation Coverage
- Health insurance information
This list may vary depending on your cause for termination. Connect with your legal and HR departments to make sure you’ve collected the right documentation.
Step 2. Start with the basics
To begin your termination letter, start by clarifying the key information, such as the employee's name, position, and other relevant details.
This will include:
- Date of letter
- Employee name
- Company name
- Name of the manager overseeing the termination
- Contact information
Remember, your termination letter can be compassionate, but it’s not the place to get emotional. By starting your letter with the facts, you set a clear and straightforward tone that leaves little room for misinterpretation.
Step 3. Provide a specific termination date
The last thing you want to do is create confusion with your termination letter.
In the first or second paragraph of your letter, make sure you’ve included a specific termination date that aligns with any relevant contractual obligations.
Step 4. State the reasons for the termination
A clear and well-documented reason for termination is critical to an effective termination letter.
For terminations for cause, this will help reduce legal risk for your business. In cases of regrettable departures due to downsizing, this will create an opportunity to empathize with the recipient and keep the door open to a future relationship.
Step 5. Indicate any further steps needed on the part of the employee
List and explain the remaining loose ends regarding payment and benefits.
This may include:
- List of items to be handed in before leaving (company cell phone, laptop, keys, etc.)
- Receipt of company property
- Details about the final paycheck, vacation pay, severance and other benefits
Finally, make sure you keep copies of the letter for future reference, in compliance with your state and local legal and HR requirements.
What kind of tone should I use?
Keep the tone of your termination letter clear, formal, and professional.
Don’t forget that in a worst-case scenario, this letter would need to hold its weight in court. All details should be clear and accurate. No jokes, sarcasm or overly-sympathetic language.
Avoid including any excess or unnecessary information or room for misinterpretation. Take the approach of "this is what's happening and why".
What should I leave out of a termination letter?
Sarcasm, jokes, inappropriate language, or any other kind of familiar language.
For example, 'Yo Steve, it was good working with you but you were kind of a pain. But hey, look on the bright side. You now have more time to hang out with your kids.' Or, 'You said you wanted to retire, it’s just happened sooner than you thought. I hope you find something more suitable to your personality!'
Even quips that this person might have once found funny will not get the reaction you're looking for when they're wondering where their next paycheck will come from.
Remember, if you're ever unsure about what should or shouldn't be included in a termination letter, always ask a qualified legal professional.
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