Layoff Letter — Free Template to Notify Employees
A layoff letter tells an employee their job is ending for business reasons, not because of anything they did. That difference matters to the employee's reputation and job search, so the letter should say it clearly, explain the practical details, and point to any support you're offering, such as severance or a reference.
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October 15, 2026
[Employee's full name]
Re: Notice of termination of employment
Dear [Employee's full name],
This letter confirms that your employment with [Company name] will end effective [Last day of employment].
This decision is the result of the elimination of your position as part of a reduction in staff.
Final pay: [Final pay details]
If you have any questions about this letter, your final pay or your benefits, please contact me.
Sincerely,
[Your name (the person signing)]
[Your job title]
[Company name]
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Make it clear it's not about performance
Employees who are laid off often worry that future employers will assume they were fired. Say plainly that the position is being eliminated for business reasons and that the decision doesn't reflect on their work, if that's true. Offering a reference is a meaningful, low-cost kindness.
Keep the business explanation brief and honest. You don't need to share financial details, but a sentence on why the role is ending helps the employee understand the decision.
Notice rules for larger layoffs
If you're laying off many people at once, notice rules may apply. The federal WARN Act requires certain larger employers to give advance written notice before mass layoffs or plant closings, and several states have their own versions with different thresholds. Check whether these rules apply before you set dates.
Even when no notice law applies, giving as much warning as you can is good practice. It helps the employee plan and protects your reputation with the people who remain.
Severance and support
If you're offering severance, mention it in the letter and put the terms in a separate agreement. Severance agreements often include a release of claims, which can have specific requirements depending on the employee's age and the number of people laid off.
Also mention when health coverage ends, information about continuing coverage, and any outplacement help or recall rights. Many states also require employers to give separating employees information about unemployment benefits.
What to do, step by step
Review the file before deciding
Check prior warnings, performance reviews, any contract or union agreement, and your employee handbook. The reason in the letter should match what the records show.
Check final pay and benefits rules
When the final paycheck is due, and whether unused vacation must be paid out, varies by state. Some states require payment on the last day. Confirm the rules for the employee's work location before you set a date.
Fill in the letter
Answer the questions above. Keep the tone calm and factual. State the decision clearly, give a brief reason, and explain final pay, benefits and returning company property.
Get a second look for higher-risk cases
If the employee recently complained, took protected leave, raised a safety or discrimination concern, or has a contract, get legal help or HR review before sending the letter.
Deliver it in person, then in writing
Tell the employee in a private meeting with a witness, then hand over or email the letter. Keep a signed or dated copy in the personnel file.
What if the employee disputes the termination?
Listen and stay calm. Let the employee explain their view, but don't reopen the decision on the spot. Point them to the person in the letter for questions about pay, benefits or returning property.
If the employee says the decision was unfair, retaliatory or discriminatory, take it seriously and document what they say. That's the point to involve HR or get legal help, especially if they mention a complaint they made or leave they took.
Former employees may file for unemployment benefits, and the state may ask you for information. Answer accurately and consistently with the termination letter. Whether someone qualifies is decided by the state, not by the letter.
Example layoff letter
A filled-in sample with made-up details, so you can see the finished result.
Northgate Dental Group
October 5, 2026
Tyler Brooks
Re: Notice of termination of employment
Dear Tyler Brooks,
This letter confirms that your employment with Northgate Dental Group will end effective October 9, 2026.
This decision is the result of continued performance concerns that have not improved despite prior feedback and warnings.
This decision is due to a decline in patient volume at our Eastside location and is not a reflection of your work. We are glad to provide a positive reference and to let you know if a suitable position opens at another of our offices.
Final pay: Your final paycheck, including pay through your last day and your accrued, unused vacation, will be paid by direct deposit on October 16, 2026. You will also receive two weeks of severance pay, as described in the separate agreement enclosed with this letter.
Benefits: Your health coverage will continue through October 31, 2026. You will receive separate information about continuing coverage under COBRA.
Please return all company property, including your office keys, ID badge and company laptop, on or before your last day.
If you have any questions about this letter, your final pay or your benefits, please contact me.
Sincerely,
Lena Ortiz
Practice Manager
Northgate Dental Group
Frequently asked questions
What's the difference between a layoff and a termination?
A layoff ends employment for business reasons, such as cutting costs or eliminating a role. A termination for cause ends it because of the employee's performance or conduct. Both end the job, but the reason affects references, unemployment and how the employee explains the gap.
Do I have to pay severance in a layoff?
Generally there's no federal requirement to pay severance, but your own policies, contracts or past practice may create an obligation, and a few states have specific rules. If you offer it, put the terms in writing.
Can laid-off employees collect unemployment?
Usually, yes. Losing a job because a position was eliminated is the most common situation in which people qualify, though each state sets its own rules. Many states require employers to give separating workers information about how to apply.
Should I tell the employee if they can be rehired?
If you'd consider them for future openings, say so. It softens the news and keeps a good relationship. Only promise recall rights if you actually intend to honor them.
Do I have to give a reason in a termination letter?
Many US jobs are at-will, which means an employer often doesn't have to give a reason, but a few states have rules on service letters or written reasons on request. Giving a brief, honest reason that matches your records is usually the clearest approach.
When is final pay due after termination?
It depends on the state. Some states require the final paycheck on the last day, others by the next regular payday, and rules on paying out unused vacation also differ. Check your state labor department's guidance before setting the date in the letter.
FairLetter is not a law firm and does not provide legal advice. Letters are templates you customize and send yourself.