Letting an employee go is difficult for all parties involved, and there are right ways and wrong ways to lay an employee off. The process requires a fine balance of legal compliance and human compassion. After all, from an employee’s point of view, being laid off is life-changing and often difficult to accept. This is why striking the right tone is essential, not only when delivering the news verbally, but also in any correspondence you are required to send.
When done well, layoff letters not only serve a legal purpose, they can also soften the impact of the news and help when it comes to communicating layoffs to remaining employees. With this in mind, in this article we will provide you with advice on how to create professional and compassionate layoff letters for when you need to terminate an employee’s contract, including a template you can use as a starting point.
What Is a Layoff Letter?
As the name suggests, layoff letters or notices are notifications that are sent to employees when they are removed from their position due to circumstances outside their control. This could include instances such as when an organization chooses to downsize their teams due to mergers, acquisitions, or poor financial conditions, for example, as opposed to the employee being fired for poor performance. The correspondence gives context to the situation of the receiver’s termination and informs them about their last day with the company.
You may use the letter to give employees recommendations for what their next move should be. Businesses that offer outplacement services to their team members may include details on how to utilize these programs. The letter can also let the laid-off professional know if there’s an upcoming informational meeting with the human resource department that they should attend.
Seen as a common courtesy, in addition to being a legal requirement, sending layoff notices will typically reduce the likelihood of potential lawsuits and employee backlash, as well as help to prevent the business from developing a negative reputation, both internally and among customers and the public. After all, remaining employees may feel the organization doesn’t have their best interests at heart if colleagues are let go without official notice by way of a letter, which may lead to unhappy reviews about the company from ex-employees and resentment/uncertainty building within the remaining workforce.
What Should Be Included in a Layoff Letter?
A layoff letter should be both clear and sensitive in conveying the main points the employee needs to know about their separation from the company. Confirm the employment separation, explain the business reasons for the layoff, and outline how the company will be supporting the employee as they depart. The letter must specify the date the separation is effective, summarize final paycheck, severance, and benefits details, and provide instructions on next steps. Most importantly, it should reflect empathy, transparency, and a commitment to helping impacted employees move forward.
Key Components of a Layoff Letter
- Clear separation statement: Directly state that the employee’s role is being eliminated and that employment will end due to a layoff.
- Business rationale: Briefly explain the organizational reason (e.g., restructuring, workforce reduction, market changes) to provide transparency and reinforce that the decision is not personal or reflective of the employee’s performance.
- Effective date: Specify the exact last day of employment and clarify whether notice or garden leave applies.
- Compensation details: State when and how the employee will receive the final paycheck and unused PTO payout (if applicable), and explain severance terms and any required agreements.
- Benefits information: Explain what will happen to the employee’s health coverage (including COBRA, if applicable), retirement plans, and other benefits.
- Outplacement and career transition support: Detail the availability of career coaching, resume support, job search tools, and transition resources to help the employee find new employment.
- Next steps and logistics: Give instructions for returning company property (such as a laptop, other computer equipment, and phone) and accessing final documents, and provide a point of contact for follow-up questions.
- Tone and professionalism: Maintain a respectful, appreciative tone that acknowledges the employee’s contributions and preserves employer brand reputation.
Offering your sympathies and sharing your gratitude with the impacted employee through the layoff letter can be a nice gesture that shows the employee that the organization does care for their team, even while making difficult business decisions.
Sample Layoff Letter Template
Below we have outlined what a professional yet compassionate layoff letter may look like. This can be used as a basic template.
Dear [employee name],
I regret to inform you that as of [termination date], you will be laid off from your position as [title]. [Company name] needed to [company action such as downsize or temporarily terminate] its employees due to [reason for the layoff, like a merger, acquisition or business performance].
Your last paycheck with [company name] will be deposited to your bank account on [deposit date] or mailed to you if you do not have direct deposit. Any paid time off you haven’t used will be added to your paycheck’s total. Your other benefits with [company name] will be available until [date] (Note: Companies often extend healthcare benefits beyond the end of the month, so if this date is different to the termination date, it is important to specify.)
With your termination, please return the following items to [department name] by [return date]:
[List all required items in bulleted form]
Please know that we greatly appreciate the contributions you have made during your time at [company name] and we wish you the best in your career. Our human resources department will contact you on [contact date] to conduct your exit interview.
If you have any concerns or questions regarding your termination, please contact [your line manager or a member of the HR team] here [insert relevant emails/phone numbers].
Sincerely,
[Your name]
[Title]
Final Thoughts
Layoffs are sometimes unavoidable for organizations facing circumstances outside of their control. Understanding how to write a professional layoff letter will give your impacted employees the empathy they deserve—and the information you are required to provide—during a difficult time.
INTOO’s outplacement program helps employees transition to new jobs through an unlimited number of hours of one-on-one, on-demand coaching from premier career counselors, resume reviews, and other career services. Learn more about what outplacement is how our outplacement program can benefit your company when you’re transitioning employees.
* All liability with respect to actions taken or not taken based on the contents of this article are hereby expressly disclaimed. The content in this document is provided “as is” and no representations are made that the content is error-free. The information provided in this document does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available in this document are for general informational purposes only. Information contained within this publication may not constitute the most up-to-date legal or other information. Readers of this publication should contact their attorney to obtain advice with respect to any particular legal matter. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.
INTOO staff writers come from diverse backgrounds and have extensive experience writing about topics that matter to the HR and business communities, including outplacement, layoffs, career development, internal mobility, candidate experience, succession planning, talent acquisition, and more.
