Severance Letter Template

In plain language: States the date the letter is issued, the employer's name and address, and the employee's full name, job title, and address.

Common mistake: Using the employee's informal nickname instead of their legal name as it appears on payroll records — this creates a mismatch with the release agreement signed later.

In plain language: Clearly states that employment is ending, the reason category (position elimination, restructuring, or layoff — not cause), and the exact last day.

Common mistake: Using ambiguous language like 'we are parting ways' instead of explicitly stating termination. Vague language creates disputes about whether the separation was voluntary or involuntary.

In plain language: States the total severance amount, how it was calculated, and when and how it will be paid — lump sum or installments.

Common mistake: Omitting the calculation basis. If the employee later disputes the amount, a letter that states only the total — not the formula — is harder to defend.

In plain language: Describes what happens to health, dental, vision, and any other benefits after the termination date, including COBRA election instructions if applicable.

Common mistake: Promising to pay COBRA premiums in the letter without confirming the financial commitment in the release agreement — creating an untracked obligation.

In plain language: Confirms the payout of any unused vacation or PTO balance owed at termination and when the final paycheck will be issued.

Common mistake: Omitting the accrued PTO payout in states or provinces where it is legally required — exposing the company to a wage claim even after the release is signed.

In plain language: Lists items the employee must return — laptop, access cards, documents, and credentials — and the deadline for returning them.

Common mistake: Not specifying a return deadline or method. Without one, employees retain equipment indefinitely and the employer has no documented basis to withhold the final paycheck in states that permit it.

In plain language: Reminds the employee that existing confidentiality and non-disparagement obligations survive termination, referencing the original employment agreement.

Common mistake: Attempting to introduce new confidentiality obligations in the severance letter that were not in the original agreement — these are unenforceable without fresh consideration.

In plain language: States that receipt of the severance payment is contingent on the employee signing a separate release of claims, and sets the deadline for doing so.

Common mistake: Paying severance before the release is signed and the revocation period has passed — making it nearly impossible to enforce the release if the employee later files a claim.

In plain language: Describes any career transition assistance the company is offering — resume coaching, job search support, or LinkedIn recommendation — as part of the package.

Common mistake: Offering outplacement verbally but not including it in the letter. Verbal commitments made during a termination meeting are frequently disputed and difficult to enforce without written confirmation.

In plain language: A professional closing statement wishing the employee well, followed by the authorized signatory's name, title, and signature.

Common mistake: Having an unauthorized person sign the letter — such as a direct manager instead of an HR director or executive — which can expose the company to arguments that the terms were not formally authorized.

A severance letter is a formal written notice from an employer to a terminated employee that summarizes the severance package being offered — including pay amount, benefits continuation, and any conditions such as signing a release of claims. It creates a written record of the terms and serves as a reference document throughout the offboarding process.

No. A severance letter describes the package and the conditions attached to it; a severance agreement is the binding legal document the employee signs to waive claims in exchange for the payment. The letter typically accompanies the agreement as a plain-language summary. Both documents are usually delivered at the same time, but they serve different functions.

In the US, there is no federal law requiring severance pay. However, if an employment contract, offer letter, or company policy promises severance, those terms are legally binding. In Canada and the UK, statutory notice or termination pay is required by law regardless of whether a written severance offer is made. Always check the applicable employment standards legislation for the employee's work location.

The most common formula in North America is one to two weeks of base salary per year of service, with a floor of two to four weeks for shorter-tenure employees. Executives and senior managers often negotiate one to three months per year of service. The formula should be stated explicitly in the letter alongside the total dollar amount to prevent disputes.

The severance letter itself does not typically require the employee's signature — it is a notice, not a contract. The employee's signature is collected on the separate release of claims agreement, which is the legally binding document. Some employers include an acknowledgment line on the letter for receipt confirmation, but this does not constitute acceptance of terms.

Under US federal law (ADEA/OWBPA), employees aged 40 and over must be given at least 21 days to review an individual severance offer, and 45 days when the offer is part of a group reduction. Employees also have 7 days after signing to revoke their acceptance. Shorter review periods void the waiver of age-discrimination claims. There is no mandated review period for employees under 40, though 5 to 10 business days is standard practice.

A severance letter can reference an existing non-compete from the employee's original employment agreement, reminding them the obligation survives termination. It should not attempt to introduce a new non-compete — that requires fresh consideration and a signed agreement, not a unilateral notice. In jurisdictions that ban or limit post-employment non-competes, even reminder language should be reviewed carefully.

If the release is not signed within the stated deadline, the employer is generally not obligated to pay the discretionary severance amount. Any wages earned, accrued PTO owed by law, and statutory notice pay must still be paid regardless. The employer should document the refusal and confirm in writing that the severance offer has lapsed.

Yes. Employees often have immediate questions about health coverage after receiving a termination notice. Including a brief statement of the benefits end date and confirming that COBRA election paperwork will arrive within 14 days reduces follow-up questions and demonstrates good-faith administration of the termination process.