How To Write A Layoff Letter (With Examples)

Providing a formal letter detailing a decision made about a person’s employment is not only a professional and courteous thing to do, but it also has practical benefits. Some of these are:

• It creates a paper trail. Terminating employees is a tricky business because if done incorrectly, disgruntled ex-employees can and often sue employers. While it’s perfectly legal for an employer to terminate its employees, it has to have a reason to do so. This may be poor performance, inappropriate conduct, or, in the case of layoffs, an economic downturn or restructuring. Writing a letter detailing the reasons why you’re terminating your employee is the first step to creating a record that will protect you and the company in case someone tries to sue for wrongful termination.
• It alleviates questions for your employees. Losing your job is stressful, to say the least, and it’s highly likely that your employees are going to be at least somewhat shocked when they hear the news that they’re being let go. Because of this, there’s a good chance employees aren’t going to be able to remember much of the information you share with them in your meeting. After all, it’s hard enough remembering everything that goes on in a conversation under the best of circumstances, let alone when you’re processing the fact that you’re now unemployed. Providing a written record of the reasons why you’re letting them go and the next steps they’ll need to take will help them keep it all straight and avoid embarrassment by preventing them from forgetting pertinent information.
• It helps counteract misinformation. Rumors can form and spread at lightning speed in an office setting, especially in times of change or stress, and it’s all too easy for employees to miscommunicate or misunderstand why the layoffs are necessary. Having a written document detailing why you terminated an employee provides a source to point back to and prove what you actually said in case the information gets unintentionally misconstrued.

How to Write a Layoff Letter

Many companies have policies in place for what should be included in a layoff termination letter, so if that’s the case for yours, follow that.

If you don’t have a clear-cut policy or template, though, here are some steps to follow as you write:

1. Talk to your employment attorney. Because layoffs can get so tricky so fast, it’s always recommended to involve an attorney before you take any steps to let people go. This way, you can ensure you aren’t accidentally doing anything illegal or discriminatory and that you’re crossing your t’s and dotting your i’s. Have the attorney review your layoff letter before you present it to anyone, and talk through any other steps you plan to take. It may seem like a pain, but taking these extra steps will save you and your company a significant amount of hurt in the future.
2. Get to the point. Termination letters are not the time to beat around the bush. Your language should be gracious but direct, and your first paragraph should spell out what the letter is about. You can mention your in-person discussion if you want, or you can write as if this is the first time they’ve heard the news. Whichever approach you choose, make it clear that they’re being laid off and when it goes into effect.
3. Express appreciation. Make sure to thank the employee for their time and energy. This helps show the company’s gratitude for what the individual has done over time. This will also help them understand that the layoff is not due to their performance. Make sure to be specific about any contributions that they have done.
4. Make the reason for the layoff clear. Depending on your writing style and the nature of the layoff, go into the reason why you’re laying the employee off in either the first or second paragraph. If you can, provide as much information as possible about why the company has to conduct layoffs and how you went about deciding which positions should go. Whatever you decide to say, the important point here is that you make it clear that their termination is not due to their performance or behavior.
5. Detail any next steps. This includes severance packages, health insurance coverage, when and how they’ll get their last paycheck, how they’ll be reimbursed for any unused PTO, and any equipment they have turned in and still need to turn in. You can also mention any information they’ll be receiving about health insurance options or other documents they’ll need to sign.
6. Determine the time frame. Some layoffs may be temporary, so the letter should outline whether the employees layoff is temporary or permanent. For example, some companies may give laid off employees the option to return working for the company at a later date. If this is an option for your company, make sure to state it.
7. Clarify again that you’re ending on good terms. If you didn’t already, spell out that this is not happening because they were performing poorly. Thank them for their service, and offer to provide recommendations for them for their job search. If you choose to do this, you’ll have to have them sign that you’re allowed to write a recommendation on their behalf, so consider handing them that document along with the termination letter.

Example Layoff Letter

Sarah Roberts
Department Supervisor
Eagle Mortgage Company
3333 E Monroe St.
San Francisco, CA 34578
444-444-4444
sarahroberts@email.com

June 23, 2021

Sam Rodriguez
2222 S Wisconsin Ave.
San Francisco, CA 34578

Dear Sam,

This letter regretfully confirms that you are being laid off from your position as a mortgage loan processor at Eagle Mortgage Company, as we discussed in our meeting.

Due to the recent economic downturn, our company has seen its sales decrease significantly with no sign of increasing in the near future. To help offset this, we decided to eliminate half of the mortgage loan processing positions.

Our company has a last in, first out policy for layoffs, and since you were hired only two years ago, yours is one of the positions that is being eliminated.

Please note that this has nothing to do with your work for Eagle Mortgage Company. It is purely a financial decision, and we deeply appreciate the dedicated work you’ve done for the company over the last two years.

Since you’ve worked for the company for two years, you will receive two weeks of severance pay, one week for each year you’ve been employed with us. During this time, you will receive your regular rate of pay and will continue to have health insurance coverage.

Soon you’ll be receiving another letter outlining the status of your benefits after termination and your eligibility for health coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA).

In addition, you’ll be receiving your final paycheck on the company’s usual payday, the last Friday of this month. Payment for your accrued PTO and sick days will be included in this check as well. You can pick up your paycheck from the reception desk, or you can let the payroll department know you’d like them to mail it to your home.

Once you sign and return the enclosed release of claims document, you’ll receive your severance payment as well.

At the layoff meeting, we received the following: your office key, your storage room key, your identification badge, your company-owned laptop, and your company-owned tablet. Please keep the company up to date with your contact information so that we can provide you with your W-2 form and any other documents you may need.

Again, we appreciate the excellent work you’ve done as an employee. If you would like us to provide a recommendation to any future potential employers, please sign and return the attached release. This allows us to discuss your employment with these potential employers.

Please let us know if there is anything we can do to assist you during this transition. We wish you well in your future endeavors.

Sincerely,

Sarah Roberts (handwritten signature)

Sarah Roberts

How to Take Care of Your Remaining Employees

Having a coworker lose their job can be stressful for those still employed. Not only do they have to take on the task of covering the person’s responsibilities, but they also will be wondering why the person lost their job and if they’re next.

While you won’t be able to mitigate all of these stressors, you can help reduce them by taking steps to be forthcoming and intentional with your remaining employees.

1. Notify the rest of the company about the termination. Typically the HR department will take care of this, but if they don’t, it’s a good idea to send out a notice that the employee or employees will no longer be at the company. In the case of layoffs, it can be a good idea to include at least the basics of why terminated employees were let go to squelch rumors. Check with your HR department or lawyer before you send out a mass email with this information, though, and consider not sharing it until everyone you’re planning to lay off has been informed.
2. Address your team individually. If you’re in charge of the team or department a laid-off employee used to be a part of, consider providing the rest of the team with a more detailed explanation of the reason why the person was let go. Go into why the company needed to lay people off and how they were selected, as well as any severance packages they received. If it’s appropriate and your HR department or lawyer approves, consider providing them with copies of the layoff letter for their reference as well.
3. Leave the door open for employees to ask questions and express concerns, if appropriate. Generally, being available for your workers to come to you to talk about what they need as they adjust or to ask questions about being potentially laid off is helpful to the team. You’ll have to gauge this against your company’s policies and your team’s size and culture, of course. Whenever possible, though, show that you’re transparent and truly care about your employees and how this affects them.
4. Have a plan for how you’re going to cover the ex-employees responsibilities. Along the same lines as the previous point, caring for your remaining employees can look like helping them figure out how to carry the team with fewer people. Right after you conduct the layoffs, share whether that person’s role is going to be totally dissolved or if their responsibilities are going to be redistributed. If they’re going to be redistributed, explain how tasks will be doled out and how team members will be trained in those. If possible, ask for your employees’ input on this plan as well. They know who can handle what best and may be able to save you some trial and error, as well as prevent you from having to deal with a team of frustrated workers.

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