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Writing a professional end of contract letter is one way to make this tough time a little smoother for terminated employees. This notice should outline what they can expect next with regards to pay, conversion of benefits, and severance packages. An at-will employment relationship dictates that a company can let a worker go for any reason, but it’s considered good conduct to also briefly explain your reasoning in the letter.
The end of contract letter template below begins with the phrase “As you are already aware…” because it assumes the employee has already been informed of the termination – it’s always advisable to deliver this news in person first. Aside from this, remember to also arrange an exit interview and make the effort to supply the employee with any documents and contact details they might need to find a new job.
You can use the template below as a starting point for your termination letter.
End of Contract Letter Template
{Date}
{Employee’s Name}
{Employee’s Street Address}
{City, State Zip Code}
Dear {Employee’s Name},
As you are already aware, {Company Name} has undergone various changes recently, and to remain competitive we have to downsize our staff contingent and eliminate {number} positions across the {Department Names} departments. We regret to inform you that your role is one of those being eliminated, based on {explain criteria used to decide which employees are laid off}. Your final working day is {date}.
We will continue to pay your salary until {date}. Your final paycheck will be delivered by {method of payment}, and will include a sum to cover the unused personal time off you have accumulated. It’s important that you’re aware that all benefits will stop on your last day of work. We will arrange a meeting to discuss how you can make the necessary conversions and changes to continue healthcare coverage under COBRA. [If applicable add information about a severance package and what it includes here].
We ask that you kindly return company property in your possession – namely {list any company-owned items that the employee has} – on or before your termination date. Should you wish to meet to discuss aspects of your termination further, we would be happy to arrange this. Similarly, if you have any questions, please contact {Name} on {contact number}.
Again, we’d like to express how sorry we are to have to take this step. We are grateful for all your hard work.
Sincerely,
{Your Name}
{Your Job Title}
{Company Name}
Please sign below to indicate that you have read and understood this letter.
Date: ___________________
Signature: ____________________
Want to use this letter?
The first paragraph of this end of contract letter template outlines the reason for termination and the criteria used to make the decision in a brief, objective manner. While it’s important to do some explaining, and you can include a few more details than this template does, keep your reasoning concise and factual – if you waffle or sugarcoat the facts, you could give the employee legal ammunition.
Importantly, the letter also clearly states when company benefits will cease and mentions the option to continue medical insurance under the COBRA plan. Depending on your situation, terminated employees may have the right to post-layoff healthcare coverage, so cover yourself by including these points – as well any additional info about the cessation of any other benefits – in the letter.
With regards to writing tone, try to strike a balance between being formal and compassionate. Termination is a serious matter and deserves to be treated as such, but you also want your former employees to feel that they were valued as people, so acknowledge the gravity of the situation and sincerely thank them for their work.
Remember, using the end of contract letter template above doesn’t guarantee a legally sound letter, so always get legal professionals to review your messaging.