Highlights

1. A termination letter officially notifies an employee of dismissal and explains the reason and effective end date.
2. It must include final paycheck details, return of company items, and benefit or COBRA information.
3. Letters should show empathy, be clear and concise, and state the reason without blame.
4. Appreciation for the employee’s work helps preserve dignity and maintain professionalism.
5. HR should review the letter to ensure clarity and compliance with company policies.

In some situations, reducing the number of workers on staff becomes necessary. Letting go of an employee is expected in the business world. However, respectful dismissal of employees can improve the way you lead teams or work in human resources. So, in this blog, we define what a letter of termination is, teach you how to write it, and provide you with a template and examples.

What is a Letter of Termination? 

A letter of termination is a written notice from the employer about dismissing the employee from the company. The official letter records the end of the employment relationship and explains the reasons for the termination, the effective date, and any other important information linked to the employee’s leaving. In most cases, a termination letter explains the last tasks for the employee, including returning company equipment, and provides information on their benefits and final pay. 

However, if your boss just fired you and you're looking for a new job close to home, Yulys is here to help. You can find local and remote employment opportunities from 8000+ companies worldwide. Moreover, it offers easy-to-use free resume templates, job alerts, and the ability to apply to jobs that fit you. Start fresh with Yulys and find your next job faster!

What Should Be Included in a Termination Letter?

When making a termination letter, it is vital to include things that follow the law and help the employer communicate clearly with the employee. These are the main points to include when creating a termination letter: 

1. Date of Termination: Mention when the employment is expected to end. This means both parties have a fixed time when they move out of the employment contract. 
2. Reason for Termination: Clearly state the grounds for terminating the employee. An explanation must be composed so both parties have all the facts needed. 
3. What Led to Termination: Make a brief statement about the reasons a termination was considered. This background information is essential for workers to use in legal actions and remember what happened before their release. 
4. Equipment Return Instructions: If needed, clarify what company equipment the employee should bring back after finishing the assignment. Giving a checklist will make it easier for all candidates to hand in all their belongings without mistakes. 
5. Final Paycheck Details: Notify the person how and when they will get their final paycheck. Remember to provide any vital information about deductions or changes on the tax form. 
6. Benefits and COBRA Information: Make known the employee’s benefit situation after leaving, such as health coverage, and share details on COBRA in case they can obtain insurance from their employer after separation. 
7. Severance Package Details: Please state what the severance package will cover if the employee receives it. The employee should be clear on what severance they will be given and what must happen to receive it. 
8. Reminder of Agreements Still in Effect: Let the employee know that specific promises, such as not revealing confidential details or not working for competitors, still apply. 

How to Write a Termination Letter?

The kind of termination call you make will decide the letter’s format and the specifics you should cover. Here are some points you should remember when writing your letter respectfully:

1. Show Empathy First

No matter the dismissal situation, always try to understand and empathize with the other person. Acknowledging how complicated things have become and ensuring the employee knows you care about their feelings at the start of your letter is helpful.

Phrases like “I believe this news may be hard for you to accept” or “This likely came as a surprise” can open your letter, but others might think they do not carry much weight. You should consider the situation and your true feelings before writing your opening statement. At the same time, you should not forget that understanding and being to the point is very important.

2. Make Your Message Simple and to the Point

The message from the letter should be clear, as you need to tell the other party that their position is being terminated. Be sure to immediately let the reader know why you are writing the letter. Try to avoid complicated ways of speaking or speaking in vague terms. For better clarity, use unsophisticated words and phrases to show the message.

3. State the Reason for Your Decision

Even though you should keep your letter brief, it should explain your choice to end the employment. Speak briefly about why the termination occurs in a friendly, honest, and non-accusatory way.

It’s best to be constructive without pointing the finger at the employee. Alternatively, look into the factors that led to the business or performance terms decision. For decisions made on performance grounds, explain the situation to the employee so they can develop and do better.

4. Express Appreciation

If the employee and the company remain on good terms, be sure to thank them for what they did while working for the company.

Consider bringing up their work skills and discussing what they improved in the company and team. Appreciating the employee keeps the decision from being too hard and helps them keep their dignity.

5. Share Essential Details and Facilities About the Job

Make sure to include in your letter the date when the employment ends, the details of the final pay and the benefits, and directions on how to return company property. As their manager, you must perform different tasks to handle employee departures properly.

6. Let the HR department Review the Letter

If anyone else wrote the letter, ask the HR department to check it before you send it. With your colleagues involved, the termination letter will maintain the company’s guidelines and clarify all the needed facts. You need to send the letter immediately and pick a reasonable date of termination that suits your business and employees. When the process ends, tell your coworkers in advance about your planned departure.

3 Sample Termination Letters by Situation

Need help drafting a termination letter? Below are clear examples tailored to different circumstances that may require an employment termination:

1. Termination Letter – Company Restructuring

[Date]

[Employee Name]

[Employee Address]

Dear [Employee Name],

This letter serves to notify you that your position at [Company Name] is being eliminated due to internal restructuring. After evaluating our business needs, we've had to make changes that affect several roles, including yours.

Please understand this decision is not related to your performance. We greatly value your work and thank you for your contributions to our team.

To support you during this change, we’re offering [brief details of severance or assistance, if applicable]. Our HR team is available to help with transition support, including job references or guidance.

Feel free to contact [HR contact details] with any questions or for further information.

Sincerely,

[Your Name]

[Your Title]

[Company Name]

2. Termination Letter – Economic Challenges

[Date]

[Employee Name]

[Employee Address]

Dear [Employee Name],

Due to recent financial challenges affecting our operations, we regret to inform you that your role at [Company Name] is being discontinued.

This decision is solely based on economic constraints and does not reflect your performance or dedication. We sincerely thank you for your time and efforts during your employment.

We’re providing [mention severance or support services, if any] to assist you during this transition. Please contact [HR Manager’s Name or HR department contact] for any questions or additional support.

Best regards,

[Your Name]

[Your Title]

[Company Name]

3. Termination Letter – Unsatisfactory Performance

[Date]

[Employee Name]

[Employee Address]

Dear [Employee Name],

After a series of performance reviews and ongoing discussions, we have decided to end your employment with [Company Name], effective [termination date].

Despite support and feedback, we have not seen the improvement required for your position. This decision, though difficult, aligns with the responsibilities and expectations of the role.

We appreciate your contributions and wish you success in your future endeavors. Enclosed are the details regarding your final paycheck, benefits, and return of company property.

If you have any questions, please contact [HR contact information].

Sincerely,

[Your Name]

[Your Title]

[Company Name]

Summary

A letter of termination is key to ending a job clearly and respectfully. It should explain the reason for the decision, include important details like the last working day, final pay, and what needs to be returned. Using simple, kind words helps the process feel more professional and thoughtful. In short, a well-written letter supports a smooth transition for both the employer and the employee.