HR Glossary / Termination of Contract Letter

A termination of contract letter is an official document issued by an employer to their employee in order to end the employment contract between them.


How to write a termination of contract letter

A termination of contract letter, often simply called a “termination letter,” should be neutral, polite and courteous. It must only include factual and complete information.

A termination letter typically includes:

  • Employee’s name
  • Date
  • Grounds for termination
  • Date of termination of employment
  • Signature of the employee and the HR manager

There are various termination letter templates that can be tailored to a company’s needs.

Is a termination of contract letter mandatory?

A termination of contract letter is mandatory in Canada, with the exception of fixed-term contracts.

The employer is required to notify an employee in writing when they wish to end the employment contract between them. It is also required to give the minimum notice required by law.

Why use a termination letter?

The termination of contract letter provides a written record of the procedure that the employer can hang on to for future reference. It is part of the employee record.

For example, if a problem arises when an employee is terminated, the human resources manager can refer to it to prove that the company complied with the laws in effect.

When do you submit a termination letter?

The termination letter must be given to the employee as soon as the contract is terminated. It cannot be given after the notice period or after the employee’s departure.

What’s the difference between a termination of contract letter and a contractual termination letter?

A termination of contract letter is given to an employee upon the unilateral decision of the employer. The employee cannot challenge the decision.

A contractual termination letter is conversely written when an employee and an employer mutually agree to end the employment contract between them. It can be initiated by the employer or the employee. The contractual termination entitles the employee to unemployment benefits (unlike a resignation).


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