Alex is Sprintlaw’s co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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Ending employment is never easy, but a clear, compliant termination letter helps you close the chapter professionally and reduce legal risk.
Whether you’re dealing with performance concerns, redundancy or a probationary mismatch, a well‑drafted letter confirms the decision, explains the why, and sets out what happens next (notice, final pay, property return and more).
Below, we break down the legal basics in Australia, what your letter should include, and provide practical examples you can adapt. If you’d like a second set of eyes on your letter or process, we’re here to help so you can move forward confidently.
What Is An Employment Termination Letter?
A termination letter is a written notice to an employee that their employment is ending. It confirms the reason for termination, the effective date, and key next steps (like notice or payment in lieu, final pay and post‑employment obligations).
In Australia, there’s no one mandated format. However, the letter often becomes critical evidence if the decision is later challenged. A clear, factual and respectful letter supports a fair process and helps you stay compliant with the Fair Work system.
What Must A Termination Letter Include In Australia?
Your letter should be simple, accurate and focused on facts. As a guide, include:
- Employee details: Full name, position title and work location.
- Decision and effective date: The termination decision and when it takes effect.
- Reason(s): A concise, factual summary (e.g. redundancy due to restructure, underperformance with reference to warnings, serious misconduct).
- Notice or payment in lieu: State the notice period being worked or that you’ll make Payment In Lieu of Notice (PILON) and the amount.
- Final pay: What the employee will receive (wages to last day, unused annual leave, redundancy pay if applicable). If helpful, reference your final pay calculation method separately.
- Company property: Instructions for return of equipment, keys, documents and access cards.
- Confidentiality and post‑employment terms: Remind the employee of ongoing obligations (confidentiality, restraints, IP) under their Employment Contract.
- Support and logistics: Contact person for questions, references to Employee Assistance Program (if offered), and how to collect personal belongings.
- Attachments or enclosures: Any supporting documents (e.g. prior warnings, redundancy information, statement of service if you’re providing one).
Keep the tone respectful. Avoid language that inflames or speculates. Stick to facts you can support with records.
Legal Basics You Need To Get Right
Before you press “print”, make sure the process behind your letter is sound. In many cases, it’s the process (not the letter) that determines whether termination was lawful and fair.
1) Minimum Notice (Or PILON)
Under the National Employment Standards (NES), most employees are entitled to minimum notice based on their continuous service. Employees aged 45 or over with at least two years’ service get an extra week.
You can direct the employee to work out the notice or make Payment In Lieu of Notice if your contract allows or the employee agrees. For serious misconduct, notice may not be required.
2) Serious Misconduct And Summary Dismissal
For serious misconduct (e.g. theft, fraud, violence), you can usually terminate without notice. You still need a reasonable investigation and a fair opportunity for the employee to respond before making a final decision. Document the steps and findings succinctly in your letter.
3) Performance‑Based Dismissal
Unfair dismissal risk often turns on whether the employee was notified of performance issues and given a reasonable chance to improve. Consider the section 387 factors (the Fair Work Commission’s checklist for fairness) and keep good records: expectations, feedback, warnings and any support provided.
4) Redundancy
Where the role is no longer required due to operational changes, a genuine redundancy requires consultation (under the applicable award/registered agreement) and, for non‑small businesses, redundancy pay. Your letter should reference the restructure and confirm consultation steps taken, impacted entitlements and redeployment considerations.
5) Probationary Periods
Short services and probationary periods don’t remove your obligations. You should still act fairly and give the employee a clear reason for ending the role (even if brief) and the correct notice. For more context, see termination during probation and process tips in probation termination guidance.
6) Garden Leave
If your contract allows, garden leave keeps the employee employed (and paid) during notice while directing them to stay away from work, which can protect clients and confidential information. If you’re considering this approach, brush up on how garden leave operates and reflect it clearly in your letter.
7) Final Pay Components
Final pay generally includes wages up to the termination date, unused annual leave, and any applicable redundancy or long service leave (subject to state/territory laws and service). To avoid disputes, itemise the components and calculation basis or include a separate final pay breakdown.
8) Mutual Separation And Settlements
Where both parties agree to end employment, document the terms in a clear Employee Separation Agreement and consider a Deed of Release to manage risk and finalise claims. Even with a mutual separation, you’ll typically still issue a short confirmation letter.
Termination Letter Examples You Can Adapt
Use these samples as a starting point and tailor the details to your situation, contracts and any applicable award or enterprise agreement.
Example 1: Termination For Poor Performance (With Notice)
Subject: Notice of Termination of Employment Dear , We are writing to confirm our decision to terminate your employment with in the position of , effective . Reason for termination Over the past , we have discussed your performance against the requirements of your role, including on . Despite support and feedback, your performance has not reached the required standard. Notice period and final day Your contractual notice period is weeks. Your final day of employment will be . You are required to attend work during your notice period and continue to perform your duties as directed. Final pay and entitlements In your final pay, you will receive: • Wages up to your final day of employment • Payment for hours of accrued but untaken annual leave • Any other applicable entitlements Company property and access Please return all company property (devices, keys, documents and access cards) by . All system access will cease on your final day. Confidentiality and post-employment obligations Your ongoing obligations under your Employment Contract continue after your employment ends, including confidentiality and any restraint provisions. If you have questions, please contact on . Yours sincerely,
Example 2: Redundancy (Genuine Operational Change)
Subject: Notice of Termination Due to Redundancy Dear , We write to confirm that your position of has been made redundant due to operational changes, effective . The decision follows consultation under on . We have considered redeployment opportunities and none are suitable. Notice and final pay Your notice period is weeks. Your final day of employment will be . In your final pay, you will receive: • Wages to your final day • Accrued but untaken annual leave • Redundancy pay of weeks in accordance with the Fair Work Act/NES • Any other applicable entitlements Property return and support Please return company property by . If you would like a statement of service, we are happy to provide one. For questions, contact on . Yours sincerely,
Example 3: Summary Dismissal For Serious Misconduct
Subject: Termination of Employment - Serious Misconduct Dear , Following our investigation meeting(s) on and your opportunity to respond, we have determined that your conduct on constitutes serious misconduct. As a result, your employment with is terminated effective immediately. Final pay and property You will be paid all outstanding wages up to and any accrued but untaken annual leave. No notice is payable. Please return all company property immediately. Your ongoing obligations under your Employment Contract continue, including confidentiality and return of confidential information. If you have questions, please contact on . Yours sincerely,
Example 4: Probationary Termination (Short Service)
Subject: Notice of Termination During Probation Dear , We write to confirm that your employment in the role of will end on . This decision follows discussions on regarding your performance and suitability during the probationary period. Notice and final pay You will receive weeks’ notice/. Your final pay will include wages to and accrued but untaken annual leave. Company property and obligations Please return all company property by . Your confidentiality obligations continue after your employment ends. Please contact on if you have any questions. Yours sincerely,
Step‑By‑Step: How To Issue A Termination Letter Fairly
Every workplace and award/enterprise agreement is different, but this general workflow helps you stay organised and compliant.
- Check the contract and industrial instrument. Confirm the employee’s Employment Contract, applicable award/enterprise agreement, notice terms, and whether any special procedures apply (e.g. redundancy consultation).
- Confirm the valid reason and evidence. For performance or conduct, line up records (KPIs, warnings, investigation notes). For redundancy, document the operational change and redeployment review.
- Follow a fair process. Invite the employee to a meeting (with support person option), put the concerns to them, hear their response, and consider it before deciding. Cross‑check the section 387 fairness factors.
- Decide on notice vs PILON vs garden leave. If the contract allows, choose between worked notice, Payment In Lieu of Notice, or appropriate garden leave. Note it clearly in the letter.
- Draft the termination letter and pack. Keep it factual and concise. Prepare a final pay breakdown and any relevant documents (e.g. separation certificate, statement of service). If you want templates, consider a tailored termination documents suite.
- Deliver the message respectfully. Ideally, first communicate the decision in a meeting, then hand the letter (and email a copy). Allow questions, confirm logistics (property return, access cut‑off).
- Process final pay and systems. Calculate final pay accurately using your chosen final pay method, remove system access, and collect property by the agreed date.
- Close out post‑employment obligations. Remind the employee of confidentiality and any restraints, and internally reassign responsibilities to maintain continuity.
Common Pitfalls To Avoid
- Skipping consultation in a redundancy or failing to consider redeployment.
- Not offering a support person for a serious performance or misconduct meeting.
- Using vague or emotive reasons in the letter rather than clear, factual reasons.
- Underpaying notice, annual leave or redundancy components in final pay.
- Ignoring contractual rights such as garden leave or PILON and applying them inconsistently.
When To Get Help
It’s wise to seek advice if you’re dealing with allegations of serious misconduct, potential discrimination/adverse action risks, medical incapacity cases, or senior employees with complex restraints or incentives. A quick review of your letter and process can prevent an avoidable dispute.
Key Takeaways
- A termination letter should be clear, factual and respectful, confirming the reason, effective date, notice/PILON and final pay.
- Fair process matters: investigate where required, meet with the employee, consider responses, and check the section 387 fairness factors.
- Match the letter to the situation: performance, serious misconduct, redundancy or probation all require different content and steps.
- Be precise on entitlements: notice vs Payment In Lieu of Notice, annual leave, redundancy pay and any garden leave direction.
- Use supporting documents where needed: a tailored termination documents suite, an Employee Separation Agreement or a Deed of Release can help manage risk.
- Getting your process and paperwork right from the start reduces unfair dismissal and underpayment risks later.
If you’d like a consultation on drafting or reviewing an employment termination letter in Australia, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.
