How to write a termination letter

To write a termination letter, confirm the decision and the last day of employment, state the reason in specific terms, summarise the process that led to it with dates, set out the notice given or paid in lieu, list each component of the final pay and when it will be paid, say what property to return, and tell the employee where to get advice. The letter records a decision already made through a fair process; it cannot make an unfair process fair.

Before the letter: a fair process

When the Fair Work Commission decides whether a dismissal was harsh, unjust or unreasonable, the Fair Work Ombudsman says it considers whether there was a valid reason, whether the employee was given the reason and a chance to respond, and, for underperformance, whether the employee had been warned before the dismissal.

For employers with fewer than 15 employees, the Small Business Fair Dismissal Code sets out the same steps as a checklist. Outside serious misconduct, the employee must be warned that they could be dismissed if there is no improvement, given a valid reason related to their conduct or capacity, and given an opportunity to respond and a reasonable chance to fix the problem. The Code allows dismissal without notice or warning where the employer believes on reasonable grounds that the conduct is serious enough, such as theft, fraud, violence or a serious safety breach.

The warning letter example from a fictional cafe shows the step before: a first written warning about attendance, with five late starts in a table, the meeting held with a support person, what was considered, the expected standard, an eight week review and a single sentence on the consequence.

Only write the termination letter once that process is complete and the decision has been made, ideally in a meeting where the employee can bring a support person.

Required contents

The termination letter example, from the same fictional cafe to a barista two months later, covers everything a tribunal or the employee will look for, in seven numbered sections.

Decision. Employment ends on 18 November 2026. The reason is continued failure to meet the attendance standard after a first written warning on 14 September and a final written warning on 20 October.

Process. A table of five dated steps: an attendance meeting with a support person offered on 11 September, the first warning, the final warning, a meeting with a support person present on 16 November, and the decision on 18 November. One sentence records what the employee said at the last meeting.

Notice, final pay, property, certificate of service and advice follow, each covered below. The letter ends with a receipt block the employee can sign, or a line recording that it was handed over and they declined to sign.

Notice and pay in lieu

The Fair Work Ombudsman says an employer ending employment may be required to give notice under the National Employment Standards, and must give written notice where the employee is entitled to it. Minimum notice is based on continuous service: one week for up to one year, two weeks for more than one year and up to three, three weeks for more than three and up to five, and four weeks after five years, with an extra week for employees over 45 with at least two years’ service. An award, agreement or contract can require more. Employees dismissed for serious misconduct are not entitled to notice.

Notice can be worked, paid in lieu, or a combination. The example gives three weeks under the contract and the NES and pays it in lieu. The Ombudsman says payment in lieu must equal the full amount the employee would have received for working the notice period, and must be paid before or on the day of termination.

Final pay, line by line

Show every component with its basis, so the employee can check it against the payslip. The example’s table has four lines: wages to 18 November, 32 hours at $29.50, is $944.00; payment in lieu of notice, three weeks at 30 hours a week, is $2,655.00; accrued annual leave of 46.2 hours is $1,362.90; and leave loading is recorded as not applicable under the award for that role. The gross total is $4,961.90, and the three amounts reconcile.

The Ombudsman’s final pay guidance sets the rules for the lines:

• wages owing for hours worked, including penalty rates and allowances
• unused annual leave, paid at the amount it would have been paid if taken, including loading if the employee would have received it, even where an award or contract says otherwise
• sick and carer’s leave is not paid out
• accrued long service leave where it applies
• most awards require final pay within 7 days after the last day

One point to adapt if you reuse the example: it commits to paying the gross total within 7 days, but the Ombudsman says payment in lieu of notice is due on or before the day of termination, so pay that line on the day and the rest within the award period.

Tone, delivery and the record

Write in short, neutral sentences. The letter will be read twice: by the employee in the meeting, and possibly by a lawyer or a tribunal months later. Both need the same facts. Avoid adjectives, commentary on character and anything not in the process record.

Tell the employee where to get advice. The example puts it in a callout: the Fair Work Ombudsman gives free advice on 13 13 94, and an unfair dismissal application to the Fair Work Commission must be lodged within 21 days of the dismissal taking effect. The Ombudsman confirms the 21 day limit and that eligibility generally requires at least 6 months’ service, or 12 months with a small business.

Hand the letter over in the meeting, mark it private and confidential, and keep a signed receipt or a note that the employee declined to sign.

The contents table

The table at the end of this article lists twelve elements of a termination letter, what the cafe example says for each, and the rule or reason behind it. The note on what a warning letter is covers the earlier document the process depends on, and the guide to employee handbook sections covers the policies a warning and a dismissal should point back to.

Common mistakes

A vague reason. “Performance issues” gives the employee nothing to answer and the Commission nothing to assess.

No process record. Dates of warnings and meetings are the first thing a tribunal asks for.

Paying in lieu late. Payment in lieu of notice is due on or before the termination day.

Leaving out leave loading the employee would have received. It is paid out on termination.

Using the letter to argue. State the decision and the facts; the meeting is where discussion happens. For the mirror case, when the employee resigns, see the resignation letter example.

Build it

A termination letter speaks for the employer, so a document here uses a letterhead for it, in one of four styles: masthead, ledger, monogram or underline. A cover page is never added to a letter. Tables carry the process and the final pay, and callouts come in four variants, info, warning, success and danger, which suits the advice and time limit note.

Documents do not print citations, so the Fair Work rules the letter relies on are written into the text. If you want the receipt signed electronically, one signature block party is one signer, each with a name, email and signing order. The AI chat edits text only. The page on letterheads shows the four styles, and the tutorial on sending a document for signature covers the signing step.