A termination letter is a formal document that notifies an employee of your company’s decision to terminate their employment and/or eliminate their position. It is used as an official business record and generally includes the date and reason for the termination, as well as information on the final paycheck and benefits continuation, severance (if applicable), and the return of company property.
Remote work and multistate compliance rules make this task more complex. Layoffs can also trigger notice obligations under federal and state law. Done poorly, a termination letter can expose your business to risk. Done well, it ensures compliance and professionalism in a difficult moment.
In this guide, I’ll cover the main types of termination letters, how to write one, and what to include. You’ll also get free termination letter templates, compliance checks, and best practices to help you handle employee separations in a legally compliant manner.
Free termination letter templates
You don’t need to start from scratch. Here are four termination letter templates, including a severance release of claims agreement template, that you can download for free. Each job termination letter template uses neutral, professional language and covers the essentials, such as general final pay details and next steps. You can also customize these documents to reflect your specific circumstances.
To download the template you need, click on the options below.
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Types of termination letters
There are four main types of termination letters: with cause, without cause, with severance, and layoff termination. The type provided to an exiting employee is determined by the reason for their exit.
Although supplying a termination of employment letter is often self-explanatory for the employee, I recommend sitting down with them to explain the decision. That conversation softens the impact, gives the employee a chance to ask questions, and ensures the termination letter template you use is backed up by a clear, direct explanation.
Termination with cause
Some incidents and behaviors warrant immediate termination for cause. Severe violations of company policy, workplace violence, fraud, and illegal behavior all qualify. Immediately terminate the individual for these reasons, and then write a termination letter.
This is one instance where you may conduct the in-person termination and then send the employee a letter later in the day. If you are not delivering it in person, it is recommended to send the termination letter by certified mail to confirm receipt.
If an employee has engaged in inappropriate workplace behavior, you may choose to terminate them with cause. An employee may also be terminated for poor performance. While this can happen after a single incident, it’s usually the result of progressive discipline where the employee failed to improve.
This work termination letter format should be direct and cite the relevant policy violation. In my experience, the key is making sure your documentation supports what the letter says. Otherwise, the strongest termination letter sample won’t protect you from potential legal consequences.
Also read: 21 Fireable Offenses: Top Reasons to Fire Someone
Termination without cause
Most US companies operate under at-will employment. This means an employer can terminate an employee and issue a termination without cause letter even when there’s no misconduct.
In the case of a termination without cause, keep the letter simple and professional. It should state the end date, final pay details, and company property return requirements. I’ve found that avoiding subjective language here reduces the risk of disputes.
Termination with severance
If you choose to terminate an employee, with or without cause, you may decide to provide a severance package. This means providing additional wages to an employee, either in a lump sum or over time.
Be sure to include verbiage about the severance package in your employment termination letter. While you should keep it brief, outline the highlights of the severance package and let the employee know the date they must return the signed severance agreement to HR.
Your severance package should also include a release of claims, which is a legal document that states that the employee, in return for severance pay, releases your company from any claims, as well as waives their right to sue post-departure.
Layoff termination
A layoff occurs when a company is downsizing, restructuring, or hitting financial trouble. While an involuntary termination isn’t directly due to an employee’s inability to perform their job, most employees will take a layoff personally and figure they did something wrong.
It’s crucial to express compassion — but not remorse — in a layoff letter. Don’t apologize, and don’t say you wish it had been someone else. Keep it professional and express your appreciation for their contribution to the company.
Note that if multiple employees are affected, check whether the Worker Adjustment and Retraining Notification (WARN) Act or a state mini-WARN law applies. These laws require at least 60 days’ advance written notice to the affected employees and local government officials, and failing to comply can be costly.
What to include in a termination letter
A termination letter should be clear, concise, and professional. In addition to the employee’s name and position title, these are the elements every letter needs to communicate the decision and protect both parties.
Termination date
Be precise about the termination date. There should be no ambiguity about the employee’s last day, which could also be the same day you speak with the worker and hand over the termination letter.
Example:
This letter is to inform you that your employment with [Company Name] is terminated effective as of [Date].
Reason for termination
If you are providing a reason, be sure to state it clearly but briefly. If, for instance, you are terminating an employee because of workplace violence, you can cite the employee’s inappropriate behavior as grounds for immediate termination. It is also advised that you provide supporting documents.
Example:
This letter is to inform you that your employment with [Company Name] is terminated effective as of [Date]. The reason for this termination is: [provide information about the incident or progressive discipline leading to termination]
Final pay and benefits details
In this part of the termination letter, you should inform the employee of their final paycheck date, details regarding benefits continuation, and Consolidated Omnibus Reconciliation Act (COBRA) coverage. Specify when their current benefits will conclude and provide contact information for retirement benefits.
Example:
Your final paycheck from the Company will be paid on [Date] and [will or will not] include payment for accrued but unused vacation/sick time.
Your health insurance benefits, if applicable, will continue through [Date]. You will receive information from our plan administrator regarding your right to COBRA coverage. If you have retirement accounts with the Company, you may discuss your options by emailing [Email].
Severance package
If a severance package is offered, include the details here. State the amount, payment timing, and conditions. You can also include the payment details in the severance agreement instead of adding this to the letter. If you decide to do it this way, please refer to the second example.
Example 1:
You are eligible for a severance payment of [Amount], contingent upon returning the signed severance release agreement by [Date]. Payment will be issued within [X] days of receipt.
Example 2:
As part of the termination, and as good faith to the contributions you provided to the Company, a severance package is being offered at this time. See the attached Severance and Release agreement for specific details.
Return of company property
If your business provides company-owned devices or items to help employees complete their work, you need to clearly state in your termination of employment letter that such property should be returned in a reasonable timeframe. List each item and detail how the employee should return those items. This may include a work laptop, mobile phone, office keys, company credit cards, and more.
Example:
Company records indicate that you have the following Company property in your possession:
[list items]
These items must be returned to the Company no later than [Date]. Please coordinate with [HR rep] to facilitate the return of these items.
Confidentiality and non-disclosure reminders
If part of your standard employment contract is a confidentiality or a non-disclosure agreement, reinforce the exiting employee’s obligations under that agreement. You can also attach a copy of the signed form as a supporting document.
Example:
As a reminder, your obligations under the Company’s confidentiality agreement remain in effect following your departure. Please review the attached copy of the non-disclosure agreement.
HR contact information
Provide a point of contact so the employee knows who to reach out to if they’re unclear about the next steps.
Example wording:
If you have any questions regarding your final pay, benefits, or this letter, please contact [HR contact name] at [phone number and/or email address].
Common mistakes to avoid
Even a strong job termination letter template can backfire if you include the wrong details. Avoid:
- Overexplaining performance issues. Keep those details in the employee’s personnel file.
- Adding personal opinions or apologies can muddy the message.
- Making promises about future employment unless contractually guaranteed.
- Using informal or casual language that undercuts professionalism.
States that require formal termination letters
While the Fair Labor Standards Act (FLSA) does not mandate termination letters, providing them is considered a good practice for businesses. However, the following states legally require a formal termination letter when firing an employee, with some requiring additional information to be included in the notice.
States | Final Pay Deadline | PTO Payout Required? |
|---|---|---|
Next scheduled payday, per FLSA* | No, unless company policy specifies otherwise | |
Next scheduled payday | No, unless company policy specifies otherwise | |
On the employee’s termination day | Yes | |
On the employee’s termination day | No, unless company policy specifies otherwise | |
Next scheduled payday | No, unless company policy specifies otherwise | |
Next scheduled payday, per FLSA* | No, unless company policy specifies otherwise | |
Next scheduled payday | Yes | |
Next scheduled payday | No, unless company policy specifies otherwise | |
Next scheduled payday | No, unless company policy specifies otherwise | |
Within 48 hours or by the next scheduled payday | No, unless company policy specifies otherwise | |
Within 21 days or by the next scheduled payday, whichever occurs later | No, unless company policy specifies otherwise |
Frequently asked questions (FAQs) about termination letters
Start by confirming the facts, such as the termination date, reason, and compliance with state pay rules. Keep the language neutral and professional while outlining details about final pay, benefits, and return of company property. Use the correct work termination letter format, and always have HR or legal review it before handing it to the employee to ensure accuracy and tone.
Yes. If you have a legitimate business reason and documentation, include it. Use neutral, factual wording when adding those details to the letter.
This depends on the type of termination an employee receives. Being fired means that your employment with a company is terminated immediately without any additional compensation (other than that required by law). Being let go with a severance package is being terminated with compensation. It is an extension of wages after the employee is terminated. Additionally, a layoff, while also a termination, may include a severance.
Yes, but don’t rely solely on email. Pair it with an acknowledgment letter, certified mail, or another proof-of-delivery method.
You should still give it to the employee. Have a witness present or send it by certified mail so you can prove delivery.
