Why Severance Letters Matter
A well-crafted severance letter is crucial when terminating employment. It outlines the terms of separation, including severance pay, benefits continuation, and non-disclosure agreements. This document not only protects your company from potential legal challenges but also fosters a positive offboarding experience for departing employees. A clear and respectful severance letter can significantly reduce the risk of disputes and maintain your company’s reputation.
Choosing the right severance letter template depends on the specific circumstances of the separation. Factors like the reason for termination, the employee’s role, and the applicable state and federal laws all play a crucial role. Consulting with legal counsel before issuing a severance letter is always recommended to ensure compliance and minimize potential liabilities. The samples below provide a starting point, but should always be reviewed and adapted by a qualified legal professional.
Understanding Key Components of a Severance Letter
Before diving into the samples, let’s highlight the core elements commonly found in severance letters. These include the employee’s last day of employment, the details of severance pay (amount, timing, and any conditions), continuation of benefits such as health insurance (COBRA), outplacement services (if offered), and confidentiality or non-compete clauses (if applicable). Clarity and precision in these areas are paramount to avoid ambiguity and potential misunderstandings.
Remember, a severance letter is more than just a formality; it’s a formal agreement between your company and the departing employee. It should be written in a professional and empathetic tone, even when dealing with difficult situations. The goal is to ensure a smooth transition for both parties and minimize any negative impacts. Regularly reviewing and updating your severance letter templates based on legal changes and company policy is a best practice.
Severance Letter Samples
Sample 1: Basic Severance Letter
[Date]
[Employee Name]
[Employee Address]
Subject: Severance Agreement
Dear [Employee Name],
This letter confirms the terms of your separation from [Company Name], effective [Last Day of Employment].
In consideration of your signing and not revoking the attached Release of Claims, the Company will provide you with severance pay equal to [Number] weeks of your current salary, less applicable taxes. This will be paid [Payment Schedule].
Your benefits will continue through [Date], after which you may be eligible for COBRA.
We appreciate your contributions to the company and wish you the best in your future endeavors.
Sincerely,
[HR Department]
Sample 2: Severance with Outplacement Services
[Date]
[Employee Name]
[Employee Address]
Subject: Separation Agreement and General Release
Dear [Employee Name],
This letter outlines the terms of your separation from [Company Name], effective [Last Day of Employment].
In exchange for your signing and not revoking the attached Separation Agreement and General Release, the Company will provide the following:
- Severance pay of [Amount], payable [Payment Schedule], less applicable taxes.
- Continuation of health benefits through [Date], with information regarding COBRA to follow.
- Access to our outplacement services program for [Duration].
We thank you for your service and wish you success in your job search.
Sincerely,
[HR Manager Name]
Sample 3: Severance with Non-Disclosure Agreement (NDA)
[Date]
[Employee Name]
[Employee Address]
Subject: Agreement Regarding Separation from Employment
Dear [Employee Name],
This letter confirms the agreement regarding your separation from employment with [Company Name], effective [Last Day of Employment].
In consideration of the mutual promises contained herein, including your agreement to maintain the confidentiality of proprietary information as outlined in the attached Non-Disclosure Agreement, the Company agrees to provide you with:
- A lump-sum severance payment of [Amount], subject to applicable taxes.
- Continuation of health insurance coverage as permitted by COBRA.
Please review the attached NDA carefully and sign and return it with this letter.
Thank you for your contributions during your time with us.
Sincerely,
[Legal Department]
Sample 4: Severance with Return of Company Property
[Date]
[Employee Name]
[Employee Address]
Subject: Severance Agreement
Dear [Employee Name],
This letter confirms the terms of your separation from [Company Name], effective [Last Day of Employment].
In consideration of your signing and not revoking the attached Release of Claims, and the return of all company property, the Company will provide you with severance pay equal to [Number] weeks of your current salary, less applicable taxes. This will be paid [Payment Schedule].
You are required to return all company property including laptops, phones, and any confidential documents. Please confirm the return of these items by [Date].
Your benefits will continue through [Date], after which you may be eligible for COBRA.
We appreciate your contributions to the company and wish you the best in your future endeavors.
Sincerely,
[HR Department]
Sample 5: Severance for Performance Based Termination
[Date]
[Employee Name]
[Employee Address]
Subject: Severance Agreement
Dear [Employee Name],
This letter confirms the terms of your separation from [Company Name], effective [Last Day of Employment]. This separation is based on performance reasons previously discussed with you.
In consideration of your signing and not revoking the attached Release of Claims, the Company will provide you with severance pay equal to [Number] weeks of your current salary, less applicable taxes. This will be paid [Payment Schedule].
Your benefits will continue through [Date], after which you may be eligible for COBRA.
We appreciate your contributions to the company and wish you the best in your future endeavors.
Sincerely,
[HR Department]
Sample 6: Severance for Restructuring/Layoff
[Date]
[Employee Name]
[Employee Address]
Subject: Severance Agreement – Restructuring
Dear [Employee Name],
This letter confirms the terms of your separation from [Company Name], effective [Last Day of Employment], due to a company restructuring.
In consideration of your signing and not revoking the attached Release of Claims, the Company will provide you with severance pay equal to [Number] weeks of your current salary, less applicable taxes. This will be paid [Payment Schedule].
Your benefits will continue through [Date], after which you may be eligible for COBRA. We are also offering [Mention Outplacement or other benefits related to the layoff, if any].
We appreciate your contributions during this time and wish you the best in your future endeavors.
Sincerely,
[HR Department]
Sample 7: Severance with Continued Consulting
[Date]
[Employee Name]
[Employee Address]
Subject: Separation and Consulting Agreement
Dear [Employee Name],
This letter confirms your separation from employment with [Company Name], effective [Last Day of Employment], and outlines the terms for your continued services as a consultant.
In consideration of the mutual promises outlined in the attached Consulting Agreement and your signing and not revoking the attached Release of Claims, the Company will provide you with:
- Severance pay of [Amount], payable [Payment Schedule], less applicable taxes.
- A consulting agreement, as detailed in the attached document, compensating you at a rate of [Rate] for [Hours] per month.
Please review both documents carefully. We value your expertise and look forward to your continued contributions as a consultant.
Sincerely,
[Management]
Sample 8: Severance with Stock Options
[Date]
[Employee Name]
[Employee Address]
Subject: Severance Agreement Regarding Stock Options
Dear [Employee Name],
This letter outlines the terms of your separation from [Company Name], effective [Last Day of Employment], and clarifies the treatment of your stock options.
In exchange for your signing and not revoking the attached Release of Claims, the Company will provide:
- Severance pay equal to [Number] weeks of your current salary, less applicable taxes.
- [Specify details regarding stock options – e.g., accelerated vesting, extended exercise period]. Refer to the stock option plan document for complete details.
Please consult the relevant stock option plan documents for comprehensive information.
Sincerely,
[HR Department]
Sample 9: Severance with Garden Leave
[Date]
[Employee Name]
[Employee Address]
Subject: Severance and Garden Leave Agreement
Dear [Employee Name],
This letter outlines the terms of your separation from [Company Name], effective [Start Date of Garden Leave]. You will be placed on garden leave until [End Date of Garden Leave], with your employment officially terminating on [Last Day of Employment].
During the garden leave period, you will remain an employee of the Company, but will not be required to attend work or perform any duties. You are still bound by all confidentiality and non-compete obligations.
In exchange for your compliance with the terms of this agreement and the signing and not revoking of the attached Release of Claims, the Company will provide you with:
- Your regular salary during the garden leave period, subject to applicable taxes.
- Continuation of health benefits throughout the garden leave period.
Sincerely,
[HR Department]
Sample 10: Severance for Executive
[Date]
[Employee Name]
[Employee Address]
Subject: Executive Severance Agreement
Dear [Employee Name],
This letter formalizes the terms of your separation from your position as [Your Position] at [Company Name], effective [Last Day of Employment].
In consideration for your full cooperation in the transition of your responsibilities, the signing and non-revocation of the attached Release of All Claims, and adherence to the existing confidentiality and non-compete agreements, the Company agrees to provide you with the following:
- Severance pay in the amount of [Amount], representing [Number] months of your base salary, less applicable taxes.
- Continuation of health benefits for [Number] months following your last day of employment.
- [State details regarding any accelerated vesting of stock options, if applicable. Refer to the stock option plan for complete details.]
- Outplacement services to assist you in your job search.
We thank you for your service and contributions to the company. Please consult with your legal and financial advisors regarding this agreement.
Sincerely,
[CEO/Board of Directors]
Sample 11: Short and Sweet Severance
[Date]
[Employee Name]
[Employee Address]
Subject: Separation Agreement
Dear [Employee Name],
This confirms your separation from [Company Name], effective [Last Day of Employment]. In exchange for signing the attached Release, we will provide [State amount or period of severance pay]. COBRA information will follow.
We wish you well.
Sincerely,
[HR Department]
Sample 12: For Cause Severance (Limited Severance)
[Date]
[Employee Name]
[Employee Address]
Subject: Separation of Employment
Dear [Employee Name],
This letter confirms the termination of your employment with [Company Name], effective [Last Day of Employment], for cause, as a result of [Briefly state reason, referencing previous warnings or incidents].
While your termination is for cause, in recognition of your time with the company, we will provide the following:
- Payment of any accrued and unused vacation time, subject to applicable deductions.
- Information regarding COBRA for continued health insurance coverage.
There will be no severance pay provided in this termination due to the for cause nature of the separation. Please return all company property by the end of the day.
Sincerely,
[HR Department]
Conclusion: Key Takeaways for Severance Letters
These severance letter samples highlight the importance of customization and legal review. Each situation is unique, and your severance letter should reflect the specific circumstances of the separation and comply with all applicable laws. Always consult with an attorney to ensure your severance letters are legally sound and protect your company’s interests. Remember to maintain a professional and respectful tone throughout the process, aiming for a mutually agreeable resolution.