Termination Letter Template: Free Examples for Small Businesses
Quick Answer
A termination letter confirms in writing that an employee's employment is ending, the effective date, final pay details, the status of benefits, what company property must be returned and who to contact with questions. Keep it short, factual and respectful, and stay consistent with the reason you gave in person. Check your state's final paycheck rules and benefit notice requirements, and talk to an employment attorney before terminating, especially when there's any risk of a legal claim.
Letting an employee go is one of the hardest parts of running a small business. A clear termination letter won't make the conversation easy, but it gives the employee the information they need, documents the decision and helps prevent confusion about final pay, benefits and company property.
This guide includes free termination letter templates for different situations and explains what to include, what to leave out, how to deliver the letter and what to check before you send it.
Note: This is general information, not legal advice. Termination involves federal, state and local laws. Talk to an employment attorney before terminating an employee, especially if there's any chance of a discrimination, retaliation or wage claim.
Before You Write the Letter
- Confirm the reason and that it's documented: write-ups, attendance records, performance reviews. See how to write up an employee.
- Check consistency. Have others been treated the same way for similar issues?
- Review policies and agreements: handbook, contracts, union agreements, severance plans.
- Check final pay rules for your state, including deadlines and accrued PTO. See final paycheck laws by state.
- Prepare benefit information, including health coverage end dates and continuation options.
- List company property to collect: keys, devices, uniforms, cards.
- Plan access removal for systems and buildings.
- Talk to an attorney if there's any risk.
What to Include in a Termination Letter
| Element | Details |
|---|---|
| Employee name and date | Who the letter is for and when it was given |
| Termination statement | That employment is ending |
| Effective date | The last day of employment |
| Reason (optional or brief) | A short, factual statement consistent with what you said in person |
| Final pay | When and how final wages and any owed PTO will be paid |
| Benefits | When coverage ends and information on continuation |
| Company property | What must be returned and how |
| Other agreements | Reminders about confidentiality or other signed agreements |
| Contact person | Who to contact with questions |
What to Leave Out
- Emotional language, insults or personal opinions.
- New reasons you didn't discuss in the meeting.
- Anything about the employee's age, race, religion, disability, pregnancy or other protected characteristics.
- References to complaints the employee made, medical leave or other protected activity, unless your attorney advises it.
- Promises you can't keep, such as a positive reference you won't give.
- Long lists of every mistake the employee ever made.
Keep the letter short and factual. The more you write, the more there is to dispute.
Template 1: Termination for Cause
[Date]
Dear [Employee name],
This letter confirms our conversation today that your employment with [Company] is terminated effective [date].
This decision is based on [brief, factual reason, e.g., "violation of our cash handling policy on [date]"], as discussed with you.
Your final paycheck, including [wages through your last day and any accrued, unused PTO as required by law or policy], will be [provided on/deposited by] [date].
Your health coverage will end on [date]. You will receive separate information about continuation coverage options, if eligible.
Please return all company property, including [list], by [date]. [Instructions for returning property.]
If you have questions about your final pay or benefits, please contact [name] at [phone/email].
Sincerely,
[Name]
[Title]
Template 2: Performance-Related Termination
[Date]
Dear [Employee name],
As discussed today, your employment with [Company] will end effective [date]. Over the past [period], we have met to discuss performance expectations for your role, including on [dates of reviews or coaching], and the required improvements were not met.
Your final paycheck will be [provided/deposited] on [date] and will include [details]. Information about your benefits and continuation options will be sent separately.
Please return [company property] by [date].
We appreciate your contributions during your time with us. Please contact [name] at [contact] with any questions.
Sincerely,
[Name]
Template 3: Attendance-Related Termination
[Date]
Dear [Employee name],
This letter confirms that your employment with [Company] is terminated effective [date] due to repeated violations of our attendance policy, including [brief facts, e.g., "no-call/no-show absences on [dates]"], following written warnings on [dates].
[Final pay, benefits, property return and contact paragraphs.]
Sincerely,
[Name]
Make sure attendance-based terminations don't count absences protected by law, such as qualifying medical or family leave. See how many no-call/no-shows before termination.
Template 4: Layoff or Position Elimination
[Date]
Dear [Employee name],
We regret to inform you that due to [business reason, e.g., "a reduction in business at our [location]"], your position is being eliminated, and your employment with [Company] will end effective [date]. This decision is not a reflection of your performance.
[Optional: You will receive [severance details] if you sign the enclosed separation agreement by [date].]
Your final paycheck will be [details]. Information about benefits and continuation coverage will be sent separately.
Please return [property] by [date].
Thank you for your work with us. [Optional: We would be glad to provide a reference confirming your dates of employment and position.]
Sincerely,
[Name]
Larger layoffs may trigger notice requirements under federal or state law. Severance agreements that include a release of claims have specific legal requirements, so have an attorney prepare them. See layoff vs. furlough vs. termination.
Template 5: End of Introductory Period
[Date]
Dear [Employee name],
This letter confirms that your employment with [Company] will end effective [date], at the end of your introductory period. [Optional brief reason.]
[Final pay, benefits, property return and contact paragraphs.]
Sincerely,
[Name]
An introductory or probationary period doesn't remove legal protections. Employees in a probation period are still protected by anti-discrimination and other laws.
Final Pay
Final paycheck deadlines vary by state. Some states require payment on the last day, others by the next regular payday. Rules about paying out unused vacation or PTO also vary. Check your state rules before setting the date in the letter. See final paycheck laws by state.
Be careful about deducting the cost of unreturned property or other amounts from a final paycheck. Federal and state rules limit deductions. See is it legal to dock an employee's pay.
Health Coverage and COBRA
The Department of Labor says COBRA generally requires group health plans sponsored by employers with 20 or more employees in the prior year to offer employees and their families the opportunity for a temporary extension of health coverage, called continuation coverage, in certain situations such as job loss. The DOL notes that people who choose continuation coverage may have to pay the full premium, up to 102% of the cost of the plan. Many states have their own continuation rules that can apply to smaller employers. Work with your benefits provider on the required notices.
Unemployment and State Notices
Some states require employers to give departing employees written notice about unemployment insurance or a separation notice. Check with your state labor or unemployment agency for requirements and forms.
How to Deliver the Letter
- Meet privately, with a second manager or witness present.
- Keep the meeting short and direct. State the decision in the first minute.
- Give the letter during or right after the meeting.
- Answer questions about final pay, benefits and property.
- Collect company property or arrange its return.
- Remove system and building access promptly.
- Keep a copy of the letter in the personnel file.
Sample opening: "Thank you for meeting with me. I have some difficult news. We've decided to end your employment, effective today. I'd like to walk you through the details, and this letter covers everything we discuss."
Collecting Company Property
| Item | Returned? | Date |
|---|---|---|
| Keys and fobs | ☐ | |
| Laptop, phone or tablet | ☐ | |
| ID badge | ☐ | |
| Company credit card | ☐ | |
| Uniforms and equipment | ☐ | |
| Vehicle | ☐ |
Use your equipment checkout form and key control log to see what the employee has.
Common Termination Letter Mistakes
- Reasons in the letter that don't match what was said.
- Missing final pay details or a date that doesn't meet state rules.
- Emotional or insulting language.
- No information on benefits.
- Forgetting property and access.
- No attorney review in risky situations.
Termination Letter Checklist
| Step | Done? |
|---|---|
| Confirm and document the reason | |
| Check consistency and policies | |
| Confirm state final pay rules | |
| Prepare benefit and continuation information | |
| Write a short, factual letter | |
| Plan the meeting with a witness | |
| Collect property and remove access | |
| File a copy in the personnel file |
Termination Meeting Checklist
| Before the meeting | Done? |
|---|---|
| Letter prepared and reviewed | ☐ |
| Final pay ready or scheduled | ☐ |
| Benefit information prepared | ☐ |
| Witness scheduled | ☐ |
| Private room booked | ☐ |
| Property list ready | ☐ |
| Access removal scheduled for after the meeting | ☐ |
Timing the Termination
- Choose a time when the meeting can be private.
- Avoid terminating right after an employee has complained, taken leave or reported a concern without talking to an attorney first.
- Have final pay information ready before the meeting.
- Plan coverage for the employee's duties.
What to Tell Your Team
After a termination, your team will have questions. Keep the message short and respectful, and don't share the reasons.
Sample: "[Name] is no longer with the company as of today. [Name] will be handling [duties] for now. Please direct any questions about [their work] to me."
References After Termination
Decide in advance what information you'll share if a future employer calls. Many businesses only confirm dates of employment and job title. Whatever your policy, apply it consistently and don't say anything in a reference that contradicts the letter.
Documentation to Keep
- A copy of the termination letter.
- Write-ups, reviews and attendance records related to the decision.
- Notes from the termination meeting, signed by the witness.
- Final pay records.
- Benefit and continuation notices sent.
- Property return records.
Ask your attorney how long to keep these records.
Terminations and Employees Who Quit
When an employee resigns, a termination letter isn't needed, but a short letter confirming the resignation, last day, final pay and property return is still helpful. See what to do when an employee resigns.
Resignation acknowledgment: "Thank you for letting us know about your resignation. This confirms your last day will be [date]. Your final paycheck will be [details], and information about your benefits will follow. Please return [property] by [date]. We appreciate your work and wish you the best."
Offboarding After the Letter
- Remove access to email, systems and buildings.
- Collect company property and update asset records.
- Process final pay on time.
- Send benefit and continuation information.
- Update your schedule and reassign duties.
- File the letter and records.
Template 6: Job Abandonment
[Date]
Dear [Employee name],
You have not reported to work or contacted us since [date], despite our attempts to reach you on [dates and methods]. Under our attendance policy, [number] consecutive days of no-call/no-show absence is considered job abandonment.
As a result, your employment with [Company] ended effective [date]. Your final paycheck will be [details]. Information about benefits will be sent to the address we have on file.
Please return [company property] by [date]. If there are circumstances we should know about, please contact [name] at [contact] right away.
Sincerely,
[Name]
Send job abandonment letters by a method you can track, and keep records of your attempts to reach the employee.
Termination Letter Tone
| Avoid | Use instead |
|---|---|
| "You were a terrible fit." | "Your employment will end effective [date]." |
| "After all we did for you..." | A brief, factual reason, if any |
| "Everyone agreed you had to go." | Nothing about others' opinions |
| "We'll always give you a great reference." | Your actual reference policy |
Termination Letter Quick Tips
- Keep it short.
- Match what you said in person.
- Include final pay, benefits and property details.
- Have a witness at the meeting.
- Talk to an attorney when there's risk.
When to Get Legal Advice
Talk to an employment attorney before terminating in situations like these:
- The employee recently complained about discrimination, harassment, pay or safety.
- The employee recently requested or took medical or family leave.
- The employee is pregnant, has a disability or recently requested an accommodation.
- The employee has a contract, severance agreement or union protection.
- You plan to offer severance in exchange for a release of claims.
- Several employees are being let go at once.
An hour with an attorney costs far less than defending a claim.
Getting Your Template Ready
Don't wait until the day you need it. Prepare a reviewed termination letter template now, with your state's final pay details, benefit contact information and a property checklist. Store it with your other HR templates so any manager can find it, and update it when your benefits or state rules change.
Also keep a short internal checklist with the template: who approves terminations, who prepares final pay, who sends benefit notices and who removes system access. Clear roles keep the process consistent.
Keep HR Records Organized With Updoot
Updoot's HR software keeps write-ups, reviews and personnel records organized, so the documentation is in one place when you need it, and asset tracking shows what company property each employee has.