How to Write a Termination Letter (with Sample)

Close-up of an employment termination letter
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Firing an employee isn’t easy, but it’s a necessary step if they are having a negative impact on the organisation. The reasons for dismissal can vary from poor performance to misconduct and general layoffs, but what’s essential in every situation is a well-structured termination letter.

To ensure you don’t end up in legal battles down the road, the letter needs to be written in a specific way, and it should outline all the details of the termination and what’s to follow.

So, to make sure you’re following the correct protocols, read through our step-by-step guide (complete with a handy sample) to help you write your own employment termination letter.

Structuring Your Letter

As this is an official document, you must stick to grammatical and formatting rules to ensure that the information is presented in a professional manner.  

Your letter should typically contain the following elements:

  • Sender’s address. Your letter should include the company’s address listed in the top left-hand corner of the page, or in the top right-hand corner in US letters.
  • Include the official date that the letter was written beneath the recipient’s address.
  • Recipient’s address. The employee’s address should be listed a few lines underneath the company’s address, aligned to the left of the document.
  • As you are already on a first name basis with the employee, it’s fine to address them by their first name, for example: ‘Dear John’.
  • Opening paragraph. In the opening paragraph, you should first explain that it’s a letter of termination and then supply whether it’s effective immediately or if the employee in questions needs to work a specific notice period.
  • Within the body of the letter, you should cover everything related to final pay, paid time off, pension, healthcare and anything else that would affect the employee after their termination.
  • Final paragraph. The steps to follow should be listed in the final paragraph. For example, you can ask the employee to return all company property to the HR department (including keys, telephones, laptop and passwords).
  • The ending of the letter won’t be incredibly positive (how can you really turn a termination into a positive?!), but do make it a point to inform the recipient that you are there in case they have any questions.
  • Your name and signature. As you will need a printed copy of this letter, opt for a handwritten signature, and be sure to leave space for the employee’s signature at the bottom of the letter.

Tips for Writing Your Letter

1. Consult Your Legal Team

If you’re unsure about how to handle the termination, what notice to give the employee and whether you should offer a severance package or not, it’s a good idea to consult your legal team before you make a decision. If it’s a layoff, for example, there may be specific regulations that you need to be aware of.

It’s important to avoid wrongful termination as this can lead to endless legal battles further down the line, and it can have an even bigger effect on your organisation. Essentially, you need to ensure the termination is in line with the employment contract and that it is done fairly.

2. Discuss in Person Beforehand

It’s unfair to advise the employee of their termination without having a verbal conversation beforehand. You need to explain the cause of their dismissal and allow them the opportunity to voice their thoughts and feelings.

3. Include all Evidence for the Reason of Termination

To support your decision for firing the employee, you’ll need to include all evidence to support your claims. For example, if the employee has been on a performance improvement plan (PIP) and has received written warnings, then this moment would have been leading up for a while, and you will have ample evidence to support your decision.

Likewise, if the employee has gone against the employment contract by verbally abusing someone or destroying company property, you are entitled to fire them on the spot. That said, you should supply any evidence of their poor behaviour when delivering the termination letter.

4. Verbally Describe the Steps to Follow

Although the process will be described in detail within the termination letter, it’s important to also verbally discuss the steps that will follow. For example, you could instruct the employee to pack up their personal belongings and leave the building as soon as your meeting is over.

You can also explain what will happen with private pension schemes, healthcare and other benefits that the employee was receiving. And, if possible, you could provide a final paycheque or supply instructions on when they will receive their balance.

Sample Letter

Here’s a template to follow when you’re forming your own termination letter.

Termination Letter Sample

Things to Remember

1. Ask the Employee to Sign the Letter

Don’t forget to ask the employee to sign the letter to acknowledge and agree to the terms of their termination. You will then need to place this in the employee’s file as proof of the agreement and save a copy in case you are ever accused of wrongful termination.

2. Place the Letter in a Sealed Envelope

As the letter is confidential, you should place it inside a sealed envelope labelled with the employee’s name and the words ‘Private and Confidential’. That way, if it happens to end up in the wrong hands, they will know not to open it.

3. Choose an Appropriate Time

If the employee has gone against company policy, you won’t be able to select your timing. However, if you’ve been planning the termination for a while, you should be mindful of when you hand the letter to the recipient. It’s best to do this fairly close to lunchtime so the employee can make a swift exit if they don’t want to stick around and say goodbye to their colleagues.

While terminating an employee’s contract is difficult for any manager, it’s essential to follow the correct protocols when doing so, and it’s equally important to push emotions aside and focus on preparing a professional termination letter.

Have you had to handle a tricky termination in the past? Let us know your experiences in the comments section below.