Termination Of Employment Letter Template In Australia

Ending employment is never easy, but a clear, compliant termination of employment letter helps you do it fairly and lawfully.

As a small business owner, you want to protect your business, treat people with respect, and avoid disputes. A well-drafted termination letter is a key step in that process - it confirms the reason for termination, sets out notice and final pay, and provides a record of what you’ve communicated.

In this guide, we’ll walk through when and how to use a termination of employment letter in Australia, what to include, common mistakes to avoid, and a practical template you can copy and adapt to your situation.

What Is A Termination Of Employment Letter (And When Should You Use One)?

A termination of employment letter is a written notice confirming that an employee’s employment will end, either immediately or after a notice period.

You should issue a termination letter whenever you end employment for reasons such as conduct, capacity, redundancy, or after a failed probation period.

The letter is important because it:

• Provides clear written notice and the end date
• Records the reason for termination (which can be relevant to disputes)
• Sets out notice or payment in lieu, unused leave and other final entitlements
• Explains practical next steps (returning company property, confidentiality, contact person, reference to company policies)

For serious misconduct, you’ll usually terminate with immediate effect after a procedurally fair process. For poor performance or minor misconduct, you’ll often follow warnings or a performance management process first. Where appropriate, consider a show cause process before making a final decision.

If you want your documents and process packaged together, Sprintlaw’s Employee Termination Documents Suite can help you keep everything consistent and compliant.

What Must A Termination Letter Include In Australia?

Australian employment law doesn’t prescribe a single mandatory format for termination letters, but there are key elements that make your letter clear and defensible.

Core Elements To Include

• Employee details: Full name, position title and work location.
• Decision and end date: A clear statement that employment is terminated and the effective date.
• Reason for termination: Brief, factual reason (e.g. redundancy, serious misconduct, unsatisfactory performance after warnings, end of probation).
• Notice arrangements: Whether you’ll provide working notice, garden leave, or Payment In Lieu of Notice, and the exact notice period length.
• Final pay: What will be paid and when (e.g. accrued annual leave, notice, redundancy pay where applicable, and any authorised deductions).
• Company property: How and when the employee must return devices, keys, documents and any confidential information.
• Ongoing obligations: Confidentiality, IP ownership, restraint and non-solicitation obligations (if applicable under their employment contract).
• Contacts and process: Who to contact with questions, and how to raise concerns.

Notice Periods And Timing

Most employees are entitled to minimum notice under the National Employment Standards, unless terminated for serious misconduct. Seniority and length of service can change the minimums.

Before you draft the letter, confirm the correct notice using your contract, any applicable award or enterprise agreement, and the Fair Work minimums. If you’re unsure, review how you’re calculating notice periods to avoid underpayment risks.

Redundancy vs. Conduct/Performance

If the role is genuinely redundant, your letter should reflect that the position is no longer required. Redundancy may attract redundancy pay in addition to notice and leave, depending on business size and service. For conduct or capacity, keep your reason short and factual and ensure your process was fair before issuing the letter.

Probation Period Considerations

Even in probation, you still need to follow the notice rules from the contract or relevant instrument. A concise letter referencing probation is usually appropriate. For more context on risks and process, see termination during probation.

Step-By-Step: How To Prepare And Issue A Termination Letter

1) Check The Contract And Any Applicable Award

Start with the employment contract and any award or enterprise agreement. Confirm notice periods, redundancy provisions, garden leave rights, and post-employment obligations. The clearer your contract, the easier this step will be.

2) Confirm The Reason And Ensure A Fair Process

For performance or conduct, ensure you’ve documented concerns, provided warnings and an opportunity to respond, and considered any response. Where allegations are serious, it is common to send a show cause letter and review the employee’s response before deciding.

3) Decide On Working Notice, Garden Leave Or Payment In Lieu

Working notice keeps the employee on deck through their notice period. Garden leave removes access to systems and duties but preserves pay and benefits during notice. Payment in lieu ends the employment immediately but pays out the full notice entitlement.

4) Calculate Final Entitlements

Work out notice (or pay in lieu), accrued but untaken annual leave, redundancy pay if applicable, and any outstanding wages or allowances. Think about superannuation treatment for each component and whether it applies. If you opt for payment in lieu, confirm your obligations around super and tax and align your letter with your decision.

5) Prepare The Letter And Supporting Documents

Draft the termination of employment letter with the elements above. If you’re settling broader issues or offering an ex gratia amount, you may also prepare a Deed of Release for signature.

6) Deliver The Decision And Provide The Letter

Where possible, meet in person (or via video if remote) and then give the letter. Be clear, respectful and brief. Confirm how and when final pay will be made, and how to return company property.

7) Follow Through On Administration

Process final pay, deactivate access, collect property, and organise any post-employment obligations. In some cases, you may also need to provide an Employer Separation Certificate when requested.

Termination Of Employment Letter Template (Australia)

Use this practical template as a starting point. Adapt it to your facts, your contract and any award, and keep the tone professional and respectful.

Private & Confidential

Subject: Termination of Employment

Dear ,

We write to confirm that your employment with  will end on .

Reason
Your employment is being terminated due to . This decision has been made after .

Notice
Your contractual notice entitlement is  weeks. . / You will be placed on garden leave until . / Your employment will end immediately and you will receive payment in lieu of  weeks’ notice.]

Final Pay
You will receive:
• Outstanding wages to your final day of employment
•  weeks’ notice 
• Accrued but untaken annual leave
• 
These amounts (less tax and any authorised deductions) will be paid on or before . A final payslip will be provided.

Company Property & Information
Please return all Company property in your possession by , including . You remain bound by your obligations regarding confidentiality, intellectual property and  under your employment contract.

References & Records
If you require confirmation of your employment dates or other basic details, please contact . Where requested, we will provide any required separation documentation.

Contacts
If you have any questions about this letter or your final pay, please contact  on .

We thank you for your contributions and wish you all the best for the future.

Yours sincerely,

Tip: Keep the “Reason” short and neutral. Avoid editorial comments; stick to facts and your process. Where serious allegations were investigated, avoid reproducing the entire investigation in the letter - your records should already contain that detail.

Common Mistakes To Avoid

Cutting Corners On Process

Even if you have good reasons, a rushed or unfair process can result in an unfair dismissal claim. For alleged misconduct, consider a show cause step. For performance issues, document goals, support and warnings before you decide.

Incorrect Notice Or Final Pay

Underpaying notice or leave is a common trap. Double-check the contract, any applicable award, and Fair Work minimums. If you decide to end employment immediately, ensure your letter and payroll align with Payment In Lieu of Notice requirements.

Using The Same Letter For Every Scenario

Redundancy, misconduct, performance and probation each call for different content and attachments. For example, a redundancy letter should reference consultation and selection, while a probation letter is usually short and straightforward. For probation scenarios, it helps to understand the nuances of termination during probation.

Forgetting Post-Employment Obligations

Remind the employee about confidentiality and any restraints from their employment contract. If you’re resolving broader issues or offering a goodwill payment, consider using a Deed of Release to formally document the settlement.

Not Preparing For Edge Cases

If the employee is suspended pending investigation or stood down, the content of your letter and the timing will differ. Make sure your investigations and any stand down or suspension processes are documented and consistent with your contract and policies before issuing a termination.

Should You Offer A Separation Agreement Instead?

Sometimes, both sides prefer to end the relationship by agreement rather than unilateral termination. In those cases, you might issue a brief termination confirmation together with a negotiated settlement, often documented as an Employee Separation Agreement or a deed.

This approach can help manage risk where you’re providing additional benefits (for example, an ex gratia payment), or where you want certainty that all claims are released.

Whether you choose a straightforward letter or a negotiated exit, keep your records and payroll consistent with the final arrangement. If the former employee asks for it, you may also need to provide an Employer Separation Certificate to assist with Services Australia claims.

FAQ: Quick Answers For Employers

Do I Have To Give A Reason In The Letter?

Best practice is to state a brief, factual reason. This helps demonstrate a fair process and can reduce disputes. Avoid unnecessary detail or emotion.

Can I Terminate Immediately?

Yes, you can end employment immediately if you pay out the required notice or if serious misconduct justifies summary dismissal. If you’re paying out notice, ensure your letter clearly sets out the Payment In Lieu of Notice and final pay components.

What If The Employee Is On Probation?

Follow the contract and give the required notice. Keep the letter concise. If in doubt about process risk, review your approach against the guidance for probation termination.

Can I Reuse This Template For Redundancies?

You can, but tailor it carefully. A redundancy letter should reference consultation and confirm the role is no longer required. It may also attach redundancy pay calculations where applicable.

What If The Employee Disputes The Decision?

Maintain a professional tone and keep meticulous records of your process, warnings, and investigation. A carefully prepared letter will help show that your decision was fair and lawful.

Key Takeaways

• A termination of employment letter is essential for clear, fair and legally compliant communication when ending employment in Australia.
• Include the end date, reason, notice (or pay in lieu), final pay components, property return and ongoing obligations.
• Match your letter to the scenario - redundancy, misconduct, performance or probation each require a slightly different approach.
• Check the contract and any applicable award to get notice and entitlements right, and align payroll with what your letter says.
• Consider a show cause step and document your process to reduce risk of unfair dismissal claims.
• Where appropriate, use an Employee Separation Agreement or Deed of Release to finalise matters cleanly.

If you’d like a lawyer to prepare a tailored termination of employment letter or help you streamline your process, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.