A termination letter template is a standard letter used by managers and supervisors to formally notify an employee, contractor, or service provider of the decision to end the working relationship. It can include the cause for termination, effective date of termination, and other details, such as information on severance pay, benefits, and how to return company resources.
Letting someone go is never easy, but with a straightforward termination letter template, you can keep the process simple â while ensuring that all necessary documentation is in order.
In this guide, weâll share 5 free templates, plus the latest best practices for writing a simple but effective termination letter:
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What to include in your employee termination letter
If youâve never had to terminate an employee contract before, you might be surprised to find out that every termination requires an official notice via letter or email, even if youâve already notified them 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. Depending on the circumstances, you may want to have your legal team review your dismissal letter template.
However, in most cases, a standard termination letter will include:
Date of termination
This is the official last day of employment. If there are critical offboarding steps â for example, gathering any company-owned equipment or providing outplacement services â you may also include a timeline leading up to the effective date of termination.
Reason for termination
Whether itâs due to performance, violation of company policies, or other reasons, transparency is key. Include a clear explanation for the termination.
List of verbal and written warnings
Explain how you tried to help the employee improve before making the decision to terminate. Outline any performance improvement plans, previous discussions, and official warnings.
Receipt of company property
List any items that need to be handed in before the final departure, such as company mobile, laptop, and key card.
Details of final pay and benefits
Include dates and details regarding final paycheck, severance pay, unpaid leave, or other benefits. For example, when they can expect payment for unused paid time off (PTO) or what happens with their healthcare benefits and retirement plans.
Disclaimer: The information in this article is not a substitute for professional legal advice. To reduce your risk as an employer, always check with your legal team before terminating an employee contract.
5 sample termination letters with examples
The following sample termination letters can be customized according to your needs. Remember to send the letter to your human resources (HR) and/or legal team for signoff before you send it to the employee or contractor.
1. Termination due to poor performance
A termination letter due to poor performance explains that the employee hasnât met agreed-upon goals or performance expectations â for example, consistently missing deadlines or failing to hit their targets. The letter usually references any previous warnings, performance reviews, and improvement plans to provide clarity on the reason for termination.
Template
[Date]
[Employee Name / Address]
Subject: Termination of Employment
Dear [Employee Name],
This letter serves as formal notification that your employment with [Company Name] will be terminated effective [Date of Termination].
Over the course of your employment, we have made several efforts to address concerns regarding your performance in your role as [Employee's Position]. Despite multiple discussions and written warnings, there has been no significant improvement in meeting the required performance standards.
To summarize, the following concerns were discussed with you on [Date(s) of Warning(s)]:
- [Example of performance issue 1]
- [Example of performance issue 2]
- [Example of performance issue 3]
We provided opportunities for improvement and set clear expectations for the necessary changes. Regrettably, the performance expectations were not met, and as a result, we have made the difficult decision to end your employment.
Please ensure that all company property, including [list company property like keys, equipment, laptop, ID badge], is returned to the HR department by your last working day on [Date]. Failure to return company property may result in deductions from your final paycheck.
Your final paycheck, which includes payment for any unused vacation days, will be issued on [Final Pay Date]. Please also note that your benefits will end on [Benefit End Date]. If you have questions regarding your benefits, please contact [HR Contact Information].
We appreciate the efforts youâve made during your time at [Company Name] and wish you the best of luck in your future endeavors. If you need assistance with the transition, please donât hesitate to reach out to [HR Contact Name] at [HR Contact Email/Phone].
Sincerely,
[Manager Name]
[Company Name]
Example
Hereâs a sample termination letter tailored for an employer in the tech sector using the template provided. With a few small changes, you can easily adapt your template to email format:
Subject: Termination of Employment
Dear [Employee Name],
This email serves as formal notification that your employment with [Company Name] will be terminated effective [Date of Termination].
Over the course of your employment, we have made several efforts to address concerns regarding your performance in your role as [Employee Job Title] in our tech department. Despite multiple discussions and written warnings, there has been no significant improvement in meeting the required performance standards. To summarize, the following concerns were discussed with you on [Date(s) of Warning(s)]:
- Lack of meeting project deadlines
- Inconsistent code quality in your deliverables
- Poor communication and collaboration with team members
We provided opportunities for improvement and set clear expectations for the necessary changes. Regrettably, the performance expectations were not met, and as a result, we have made the difficult decision to end your employment.
Please ensure that all company property, including your laptop, access card, and keys, is returned to the HR department by your last working day on [Date]. Failure to return company property may result in deductions from your final paycheck.
Your final paycheck, which includes payment for any unused vacation days, will be issued on [Final Pay Date]. Please also note that your benefits will end on [Benefit End Date]. If you have questions regarding your benefits, please contact [HR Contact Information].
We appreciate the efforts youâve made during your time at [Company Name] and wish you the best of luck in your future endeavors. If you need assistance with the transition, please donât hesitate to reach out to [HR Contact Name] at [HR Contact Email/Phone].
Sincerely,
[Manager name]
[Company name]
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2. At-will termination letter
An at-will termination letter is a formal way for an employer to end the working relationship without cause. This means that either side could have ended the relationship at any time, for any legal reason. Itâs not always about performance â sometimes, itâs just time to move on.Â
Template
[Date]
[Employee Name / Address]
Subject: Termination of Employment
Dear [Employee Name],
I am writing to inform you that your employment with [Company Name] will be terminated effective [Date of Termination]. As a reminder, your employment with us has always been on an "at-will" basis, meaning either you or the company could end the employment relationship at any time, with or without cause.
Please ensure that all company property, including [list items like keys, equipment, laptop, ID badge], is returned to the HR department by your last working day, [Date]. Failure to return company property may result in deductions from your final paycheck.
Your final paycheck, which will include payment for any unused vacation days, will be provided to you on [Final Pay Date]. Please note that your benefits will end on [Benefit End Date]. For any questions about your benefits or final paycheck, please contact [HR Contact Information].
We appreciate the contributions you have made during your time with [Company Name] and wish you the best in your future endeavors. If you have any questions or need assistance with the transition, please don't hesitate to contact [HR Contact Name] at [HR Contact Email/Phone].
Sincerely,
[Manager Name]
[Company Name]
Example
At-will termination letter templates can also be used when dealing with employee layoffs or any other reason for termination that is not related to conduct or performance.
Subject: Termination of Employment Due to Company Restructuring
Dear [Employee Name],
I regret to inform you that, due to company restructuring, your position at [Company Name] is being made redundant, and your employment will be terminated effective [Date of Termination]. This decision is in no way a reflection of your performance, but rather is a necessary step in our restructuring efforts.
Please ensure that all company property, including keys, equipment, laptop, and ID badge, is returned to the HR department by your last working day, [Date]. Failure to return company property may result in deductions from your final paycheck.
Your final paycheck, which will include payment for any unused vacation days, will be provided to you on [Final Pay Date]. Please note that your benefits will end on [Benefit End Date]. For any questions about your benefits or final paycheck, please contact [HR Contact Information].
We sincerely appreciate the dedication and contributions you have made during your time with [Company Name]. If you have any questions or need assistance, please don't hesitate to contact [HR Contact Name] at [HR Contact Email/Phone].
We wish you all the best in your future endeavors and thank you for your service to [Company Name].
Sincerely,
[Manager Name]
[Company Name]
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3. Termination letter for cause (misconduct, attendance, policy violation)
A termination letter for cause is used when an employee is let go due to specific issues like misconduct, poor attendance, or violating company policies. It explains exactly what went wrong and why the employee is being terminated. This letter is clear and direct, referencing prior warnings to help protect the company in the event of a legal dispute.
Template
[Date]
[Employee Name / 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 behavior has not improved, and the negative impact on the company's operations and work environment is unacceptable.
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].
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 [HR Contact Name] at [HR Contact Email/Phone].
Sincerely,
[Manager Name]
[Company Name]
Example
Hereâs an example of how this template can be customized for terminating an employee due to chronic absenteeism. Whatever type of misconduct youâre facing, be sure to provide details of any related policies, previous warnings, or corrective actions taken when writing your employee termination letter.
Subject: Termination of Employment
Dear [Employee Name],
I am writing to inform you that your employment with [Company Name] is being terminated due to repeated violations of our attendance policy.
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 attendance has not improved, and the negative impact on the company's operations and work environment is unacceptable.
As you are aware, you were previously counseled on attendance issues on [Dates], and you were given a written warning on [Date] regarding continued absenteeism.
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].
Please ensure that all company property, access to company systems, and any final paperwork required are returned to the HR department before your departure.
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 [HR Contact Name] at [HR Contact Email/Phone].
Sincerely,
[Manager Name]
[Company Name]
4. Termination of business contract
Termination of a business contract occurs when one party decides to end the agreement due to the other party failing to meet expectations, such as poor performance or misconduct. It signifies the formal conclusion of the partnership between a company and vendor or individual due to specific issues.
Template
[Date]
[Employee Name / Address]
Subject: Termination of Business Contract
Dear [Recipient's Name],
It is with regret that we inform you of our decision to terminate the business contract between our companies, effective [Date of Termination].
After careful evaluation of the circumstances, including [briefly explain the reasons for termination, such as changes in business strategy, market conditions, or performance issues], we have determined that ending our contractual agreement is the most suitable course of action for our company at this time.
To facilitate a smooth transition, we are committed to collaborating with you during this termination process. Our team is available to discuss and assist in the necessary steps for winding down our business activities and resolving any outstanding matters.
While we must part ways in our current capacity, we remain open to exploring potential opportunities for future collaboration in different capacities. We kindly request that you take the required actions to conclude any ongoing commitments or services according to the terms outlined in our contract. Additionally, we appreciate your cooperation in settling any outstanding financial matters, including invoices or pending payments.
We value the trust and partnership we have shared and extend our best wishes for your continued success in all your future endeavors.
Should you require further clarification or wish to discuss this matter in more detail, please feel free to contact our representative, [Company Contact], at [Contact Details].
Thank you for your understanding and cooperation.
Sincerely,
[Contact Name]
[Company Name]
Example
The following sample letter is a great example of how you can communicate a tough decision in a respectful and cooperative manner to external partners and contractors.
Subject: Termination of Business Contract Due to Unforeseen Market Conditions
Dear [Recipient's Name],
It is with deep regret that we must inform you of our decision to terminate the business contract between our companies, effective [Date of Termination]. This decision has been made due to unforeseen market conditions that have significantly impacted our business operations.
The sudden changes in the market landscape, including [briefly describe the specific market conditions that led to this decision], have forced us to reevaluate our partnerships and make difficult decisions in the best interest of our company's success.
In light of these circumstances, we are committed to working closely with you to ensure a smooth transition during this termination process. Our team is ready to discuss and assist in the necessary steps for winding down our business activities and addressing any outstanding matters that may arise.
While this decision means the end of our current contractual arrangement, we remain open to exploring alternative opportunities for collaboration in the future, should the circumstances allow. We kindly ask for your cooperation in promptly concluding any ongoing commitments or services in accordance with the terms specified in our contract. Additionally, we appreciate your assistance in resolving any outstanding financial matters, including invoices or pending payments.
We value the partnership and trust we have shared with your company and extend our best wishes for your continued success in navigating these challenging market conditions.
Should you require further clarification or wish to discuss this matter in more detail, please do not hesitate to reach out to our representative, [Company Contact], at [Contact Details].
Thank you for your understanding and collaboration during this challenging time.
Sincerely,
[Contact Name]
[Company Name]
5. Termination due to layoffs, downsizing, or restructuring
Sometimes you have to terminate a working relationship not because of employee performance, but because of layoffs or downsizing. The following template can be helpful during a restructuring or when a company needs to reduce its workforce for financial reasons.
Template
[Date]
[Employee Name / 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, âDue to recent market changes, the company has been forced to make difficult decisions to reduce costs, including downsizing the workforce.â] 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.
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.
Thank you for your dedicated service to our company. We would like to wish you all the best in your future endeavors.
Sincerely,
[Manager Name]
[Company Name]
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Is an official termination letter always necessary?
Yes. An official termination letter is critical for the following reasons:Â
- Compliance: An official termination letter helps prevent legal issues related to an employee's separation. And with the cost of non-compliance nearly double the cost of staying compliant, itâs a simple step every manager can take to help protect the business.
- âBrand reputation: A well-crafted termination helps ensure that former employees speak kindly about your company, helping to maintain a strong brand reputation even when things donât go to plan.
- âEmployee clarity: A great termination letter provides clarity by detailing everything â final paycheck, employee benefits, and next steps to make sure thereâs no room for confusion.
- âSets the tone for respectful communication: Handling tough conversations with grace shows integrity and respect for the individual.
How to write a termination letter
Whether you choose to follow the above employee termination letter templates or create your own, the steps for writing a termination letter are almost always the same.
1. Gather necessary details
While itâs not nice to think about, the truth is, 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 warnings
- Performance improvement plans
- Non-disclosure agreements
- Non-compete agreements
- Details of severance packages
- COBRA Continuation Coverage
- Health insurance information
This list may vary depending on your cause for termination. Connect with your legal counsel and HR department to make sure youâve collected the right documentation.
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
Your termination letter can be compassionate, but itâs 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.
3. Provide a termination date
In the first or second paragraph of your letter, make sure youâve included a specific termination date that aligns with any relevant contractual obligations.
4. State the reasons for 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, a well-written termination letter will create an opportunity to empathize with the recipient and keep the door open to a future relationship.
5. Clarify next steps
List and explain the remaining loose ends regarding final employee compensation. This may include:
- A 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 employee benefits
Finally, make sure you keep copies of the letter for future reference, in compliance with your state and local legal and HR requirements.
Employee termination letter FAQs
Here are some of the most commonly asked questions about writing an employee termination letter.
What kind of tone should I use?
Keep the tone of your termination letter clear, formal, and professional. Donât forget that in a worst-case scenario, this letter would need to hold its weight in court. No jokes, sarcasm or overly-sympathetic language.Â
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?Â
Sarcasm, jokes, inappropriate language, or any other kind of familiar language. 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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