Termination of Employment Template in Australia: How to Use It

Ending someone’s employment is one of the toughest parts of running a small business. It’s also a legal risk hotspot if the process or paperwork isn’t handled correctly.

A clear, compliant termination of employment template helps you communicate decisions respectfully, set out final entitlements, and record the key facts if your decision is ever questioned.

In this guide, we’ll walk through when to use a termination letter, what to include in your template, the legal steps to follow, and common mistakes to avoid - all from an Australian employer’s perspective.

What Is A Termination Of Employment Template (For Employers)?

A termination of employment template is a reusable letter format you can adapt for different situations when ending an employee’s employment. It frames the decision, explains the reason, outlines notice and final pay, and sets out practical next steps like returning property.

The template is not the process itself - it’s a tool to document your decision properly and consistently. Used alongside your internal procedure and any legal requirements, it helps you stay fair, clear and compliant.

When Should You Use A Termination Template In Australia?

Use a written termination letter whenever you end employment, including:

• Performance or conduct dismissals following a fair process (often after warnings or a formal response process).
• Termination during probation, where shorter notice may apply and a simpler process is appropriate.
• Redundancies, after you’ve consulted and confirmed the role is no longer required.
• Serious misconduct, where dismissal may be immediate (after a proper investigation).
• End of maximum-term or fixed-term contracts, confirming the end date and final entitlements.

Each scenario can require different steps before termination (for example, a consultation for redundancy, or an investigation for misconduct). Your template should be adaptable so it’s fit for the situation and the employee’s contract or award.

What To Include In A Termination Of Employment Template (Checklist)

Your template should be flexible but structured. Consider these core components and include versioned options so you can select the right paragraphs each time.

1) Header, Date And Employee Details

• Employer name and ABN, address and contact details.
• Employee name, position title and work location.
• Date of the letter and employment start date (for context).

2) Clear Statement Of Termination

• One sentence stating that employment is being terminated, and the effective date.
• If notice will be worked, state the last working day; if not, state that employment ends immediately and that notice will be paid in lieu.

3) Reason For Termination (Tailored Options)

• Performance or conduct: Refer to previous discussions, warnings, and the opportunity to respond, and state the reason briefly and factually.
• Redundancy: Confirm the role is no longer required due to operational change, outline consultation undertaken, and confirm any redeployment considerations.
• Probation: Note that the role isn’t a suitable ongoing fit during probation with required notice being provided or paid.
• Serious misconduct: Reference the investigation outcome and that the conduct amounts to serious misconduct warranting summary dismissal.

4) Notice, Final Pay And Entitlements

• Notice period length (from the contract, award or National Employment Standards) and whether it’s worked or paid out.
• Payment details: outstanding wages, unused annual leave, loading if applicable, and any redundancy pay if eligible.
• Timing: state when final pay will be processed and how it will be paid.
• Superannuation: confirm contributions up to the last day or payment date.

5) Company Property And Access

• List items to return (laptop, keys, security cards, tools, files) and the return date.
• Confirm IT access disabling and how personal items can be retrieved.

6) Confidentiality, IP And Post-Employment Obligations

• Remind the employee of continuing obligations under their contract: confidentiality, return of confidential information, intellectual property assignment.
• If relevant, restate any restraint of trade or non-solicitation periods (without adding new obligations).

7) References And Communication

• State whether you’re happy to provide a basic employment reference and who to contact for verification of employment.
• Nominate a point of contact for questions about pay or offboarding.

8) Attachments And Acknowledgement

• Attach a pay breakdown and any tax or separation documents (e.g. separation certificate if requested).
• Include an optional acknowledgement section for the employee to sign for receipt.

9) Optional: Offer Of Assistance Or Settlement

• For negotiated exits, include a brief note that you’re willing to provide a neutral reference or discuss a separation deed (handled outside the letter as a separate agreement).

Step-By-Step: How To Use Your Termination Template Lawfully

A good template is only half the story. Here’s the process to follow so your letter aligns with Australian employment law and your contracts.

Step 1: Check The Contract, Award Or Enterprise Agreement

Before you do anything, review the employee’s Employment Contract and any applicable modern award or enterprise agreement. Confirm minimum notice, performance processes, and any special clauses about termination or redundancy.

Step 2: Identify The Reason And Gather Evidence

Be clear on why you’re ending employment. For conduct or performance, keep notes of coaching, warnings and meetings. Where appropriate, give the employee a formal opportunity to respond using a structured process like a Show Cause Letter before you make a final decision.

Step 3: Decide On Notice, Payment In Lieu Or Garden Leave

Choose the appropriate approach based on your contract and the situation. Working notice may suit some roles; in others, it’s better to use payment in lieu of notice or place the employee on garden leave (where they remain employed and paid, but don’t perform duties).

Step 4: Meet With The Employee

Hold a short, respectful meeting to communicate the decision and provide the letter. Focus on the facts and next steps, and avoid debating the decision, especially where a full process has already been followed.

Step 5: Issue The Termination Letter

Hand over or email the letter at the meeting or immediately after. If the employee is offsite, email is usually acceptable. Ensure the letter matches the method you’ve chosen (worked notice, payment in lieu, or immediate dismissal for serious misconduct after a proper investigation).

Step 6: Process Final Pay And Offboarding

Calculate wages to the last day (or payment in lieu), pay unused annual leave and any redundancy pay if applicable, and process superannuation. Arrange the return of property, remove system access, and complete handover steps.

Step 7: Keep Records

File the letter, meeting notes, evidence of warnings or investigations, and payroll records. Good documentation is essential if a claim is raised later.

Legal Requirements Employers Need To Consider

Australian employment law focuses on a fair process and the right entitlements. Here are the key issues to consider alongside your template.

Notice Periods And Final Entitlements

Minimum notice comes from the National Employment Standards, the employee’s contract, or any award/enterprise agreement - apply whichever gives the employee the greater benefit.

Decide whether notice will be worked, paid in lieu, or covered by garden leave, and confirm this in the letter. Include outstanding wages, unused annual leave, and any other amounts such as redundancy pay if the position is genuinely no longer required.

Unfair Dismissal Risk

Unfair dismissal exposure often turns on whether a fair process was followed and whether the reason was valid. For performance or conduct, this usually means clear communication of concerns, an opportunity to respond, and reasonable time for improvement (unless it’s serious misconduct).

For redundancy, ensure consultation requirements are met and that the redundancy is genuine (the role is no longer required, not just the person). If in doubt, get advice before issuing the letter.

Probation And Short Service

Terminating during probation can involve a simpler process, but you should still act fairly and pay the correct notice. If you’re ending employment in this window, align the letter with your policy and the contract and consider this guidance on termination during probation.

Serious Misconduct

Serious misconduct (like theft, violence or serious safety breaches) can justify immediate dismissal after a proper investigation and an opportunity to respond. Your letter should reference the process you followed and the misconduct finding, and confirm that employment ends immediately.

Separation Agreements And Settlement

Sometimes a negotiated exit is best for both sides - for example, to settle a dispute or smooth the transition for a senior employee. In these cases, your termination letter can be accompanied by a Separation Agreement or a Deed Of Release documenting confidentiality, mutual releases and any ex-gratia payment.

Small Business Considerations

Small businesses still need a fair, reasonable process that suits the circumstances. Keep the conversation respectful, use your template to cover the essentials, and document the steps you took.

Sample Structure: Termination Of Employment Template (Editable)

Below is an example structure you can adapt. Replace bracketed text and remove paragraphs that don’t apply to your situation.

Employer Letterhead

Date

Private & Confidential

Notice Of Termination Of Employment

Dear ,

This letter confirms that your employment with will end on .

Following discussions on and written warnings on , we have considered your responses and determined that your employment should end due to .

Following consultation on , we confirm your position is no longer required due to . We have considered redeployment options and none are suitable at this time.

As discussed on , we have decided not to proceed beyond your probationary period. Your employment will end on .

We investigated the allegations raised on , considered your response on , and determined that your conduct amounts to serious misconduct. Your employment ends effective immediately.

Notice And Final Pay
Your minimum notice is weeks. You will work your notice period and your last working day will be . / Your employment ends immediately and you will receive payment in lieu of notice of weeks.

Your final pay will include wages up to , payment for hours of unused annual leave, and redundancy pay of . Your final pay will be processed on and paid to your nominated bank account. Superannuation will be contributed as required.

Company Property And Access
Please return company property (including ) by . Your system access will end on .

Continuing Obligations
Your obligations regarding confidentiality, intellectual property and continue after your employment ends, as set out in your contract.

Contact
If you have questions about your final pay or returning property, please contact at . We wish you the best for the future.

Yours sincerely,

Common Mistakes To Avoid With Termination Letters

• Using a one-size-fits-all letter: Tailor the letter to the reason and the employee’s circumstances. Avoid copying redundancy wording for a performance dismissal (and vice versa).
• Leaving out notice and final pay details: Employees should know the last day, what will be paid, and when.
• Under-explaining the reason: Keep it concise, but include enough context to show a fair process was followed, especially for performance or conduct dismissals.
• Creating new obligations: Don’t insert fresh restraints or new terms into the termination letter. Only restate what already exists in the contract.
• Skipping the process: The letter records the outcome. It can’t fix a missing investigation, consultation or warning process.
• Not checking the contract or award: Minimum notice and redundancy entitlements can differ. Verify them first.
• Silence on property and access: Be clear about returns, access removal and handover to avoid disputes.

Useful Documents To Pair With Your Template

Your template works best as part of a small, practical toolkit for managing exits. These documents are commonly used together:

• Employment Contract: Your starting point for notice, confidentiality, restraints and termination rights is the signed Employment Contract.
• Show Cause Letter: For conduct or performance concerns, a structured Show Cause Letter supports a fair process before any decision.
• Payment In Lieu Of Notice: When working notice isn’t appropriate, rely on the contract and this guidance on payment in lieu of notice to document payout correctly.
• Garden Leave Direction: Where suitable, you can direct an employee to take garden leave during notice, especially for sensitive roles.
• Separation Agreement Or Deed Of Release: For negotiated exits, a tailored Separation Agreement or Deed Of Release can finalise terms and reduce risk.
• Termination Document Suite: If you want a ready-to-use pack with letters and guidance, consider an Employee Termination Documents Suite so your process and paperwork are consistent.

FAQ: Quick Answers For Employers

Do I have to give a reason in the termination letter?

It’s best practice to include a brief, factual reason. For performance or conduct, reference the prior process; for redundancy, state that the role is no longer required. Avoid using sweeping or emotive language.

Can I terminate employment during probation with shorter notice?

Usually yes - many contracts allow shorter notice in probation. Still act fairly, pay the correct notice, and consider this guide to termination during probation when drafting your letter.

Should I offer payment in lieu of notice?

It depends on the role and circumstances. If it’s not appropriate for the employee to work out notice, a lawful payment in lieu of notice can be cleaner for both parties.

When should I consider a separation agreement?

Consider a Separation Agreement for negotiated exits, senior roles, or to document mutual releases and confidentiality with certainty.

Key Takeaways

• A termination of employment template helps you communicate clearly, cover entitlements and record the facts - but it must sit on top of a fair, lawful process.
• Tailor the letter to the scenario: performance or conduct, redundancy, probation or serious misconduct all require different wording and steps.
• Include the essentials: reason, notice method, final pay, property returns, and reminders about continuing obligations.
• Check the contract and any award or agreement first so notice and entitlements are correct in your letter.
• Support your template with the right documents and processes such as show cause letters, payment in lieu or garden leave, and (if needed) a separation deed.
• Good records and a respectful approach reduce dispute risk and help your business move forward confidently.

If you’d like help tailoring a termination of employment template or setting up a complete, compliant exit process for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.