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Free employment termination letter template (Word)

Reviewed by Clausery editors · · 3 min read

A formal letter notifying an employee their employment has ended (with or without cause), stating the last day, final pay, benefits continuation (COBRA) and next steps for returning company property.

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An employment termination letter (or separation letter) formally ends employment. It states the reason (if given), last day worked, final pay details, what happens to benefits/accrued PTO, COBRA notice, and how to return company property.

Keep the letter factual and concise. For involuntary terminations, deliver in person (or by email/certified post if remote) and have a witness present. Follow your state final-pay rules or you may face waiting-time penalties.

What to include#

  • Employee and role. Employee name, job title, department, manager, and termination effective date (and last day worked if different).
  • Reason (optional). Brief reason for termination: redundancy, performance, misconduct, mutual separation, or end of fixed term. Avoid editorialising.
  • Final pay. Final pay amount, pay date, accrued but unused PTO payout (as required by state law), deductions, and how it will be delivered.
  • Benefits and severance. What happens to health insurance (COBRA), retirement, equity vesting/exercise window, and any severance pay (typically conditional on a separation/release agreement).
  • Property return and next steps. List company property to return (laptop, phone, keys, badge, ID), return deadline, and contact for questions (HR).

How to fill it in#

  1. Step 1: Prepare in advance

    Coordinate with HR/legal; confirm final-pay calculation under state law and any severance package.

  2. Step 2: Hold the termination meeting

    Deliver the news in a short meeting (10-15 minutes) with a witness present; hand over the letter.

  3. Step 3: Be clear and respectful

    State the decision directly, explain final pay/benefits briefly, and avoid debate.

  4. Step 4: Collect company property

    Arrange for laptop, keys, badge and access cards to be returned immediately or within a set deadline; revoke system access.

  5. Step 5: Send follow-up paperwork

    Email the letter, COBRA notice and separation agreement (if any) to the employee; keep a signed copy.

Severance agreement

Offered in exchange for a release of claims.

Employee warning letter

Progressive-discipline step that usually precedes for-cause termination.

Two weeks notice letter

Employee-initiated resignation.

Resignation letter

When the employee resigns voluntarily.

Free HR letter templates

Full HR letter template set.

Questions

Do I have to give a reason?

In at-will states generally no, but stating a brief factual reason reduces wrongful-termination claims. You must give a reason for discriminatory/retaliatory-protected positions.

When must final pay be issued?

Immediately in some states (e.g. California), within 72 hours or next payday in others — check your state.

Can I email the letter?

Yes, especially for remote workers; hand delivery is more respectful for in-person employees.

Do I have to offer severance?

No unless a contract or policy promises it; severance is usually exchanged for a signed release of claims.

What about unused PTO?

Many states require paying out accrued, unused PTO; some do not. Check local rules.

Browse all templates →

These are general templates, not legal or tax advice. Have anything unusual reviewed for your jurisdiction.

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