Types of Termination Letters and Their Functions


Whether you are a newbie or a seasoned entrepreneur, employer, or manager, you will have to work with your partners or third parties to help achieve your business goals. As much as building a good relationship is essential in the world of business, there are inevitable and unfortunate instances that turn your business relationship sour and you are left with no choice but to break off the contact with your customers, partners, or tenant for the betterment of your business. When this happens, you will need to write a termination letter to formally end the contract that legally binds both parties.

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However, there are a lot of different types of termination letters and each one has a distinctive function. In this article, we will discuss the different types of termination and how to use them according to its function. We have also provided some sample termination letter templates which are available for free downloads and are easily customizable.

Employment Termination Letter

The employment termination letter is definitely one of the most common forms of termination letters that are used in companies. As what the term implies, it is used to terminate or end the contract between the employer and the employee. According to an article that is published at Wikipedia.com, “the termination may be voluntary on the employee’s part, or it may be at the hands of the employer, often in the form of dismissal (firing) or a layoff. Dismissal or firing is generally thought to be the fault of the employee, whereas a layoff is generally down for business reasons (for instance a business slowdown or an economic downturn) outside the employee’s performance.”

Circumstances When You Can Terminate the Services of an Employee

An employment termination, which is also widely known as a job termination or employee termination, is often issued when an employee fails to adhere to the expectations of the employers. While it is never easy to terminate an employee, the employer or manager is forced to break off the employer-employee relationship once they have proven that the employee continues to make no improvement to correct his or her erring ways. However, it is also important to make sure that the termination is legitimate and the legality of the termination process is satisfied to protect the company from a costly lawsuit that can be filed by the terminated employee.

Under the law, an employer can only terminate the job contract of the employee in three circumstances:

  • Underperformance – When an employer hires an employee and allows him to fill in the position that is offered in this company, the employer obviously expects the employee to give his or her best performance and be an asset to the organization. While stress and burnout are common elements in the workplace, there are some instances when the employee is not able to fulfill or perform his duties to the best of their abilities. However, when the employees regularly or intentionally do not perform their duties and responsibilities, then it is known as underperformance. To manage this problem, the manager will usually issue a performance warning letter.
  • Serious Misconduct – The worst mistakes that an employee can make is engaging in any forms of misconduct, such as thief, making a threat against his fellow employee, assault, or fraud, in the workplace. Serious misconduct is always considered unacceptable behavior that is why when an employee is engaged in serious misconduct, the manager will issue the erring employee with a behavior warning letter. It is important to understand that an employee does not only need to have a good work performance but also practice a proper behavior at the workplace at all times.
  • Attendance Issues – Outstanding employee attendance is one of the important elements needed for the growth and success of a business. Why? This is because when there are enough employees in the production area, the company can easily achieve their target productivity levels and is able to meet the demands of their clients. However, when an employee has attendance issues, it does not only affect the productivity of their department where he or she belongs, but it can also affect the morale of his or her department team. That is why the employee is given an attendance warning letter to inform him or her that the department does not tolerate any tardiness and absenteeism.
  • Redundancy – Redundancy often arise when the employer does not need another person to perform the duties of an employee any longer. One good example is when a newly purchased equipment can efficiently perform the same tasks assigned to the employee. Practicality dictates the employer to terminate the contract of the employee since there will be redundancy in the operation. In such case, the employee cannot file an unfair dismissal claim against his employer since redundancy is considered to be genuine at law. However, the employer needs to notify the employees about certain changes in the workplace and the people who will be affected. Additionally, it is a must for the employer to discuss the steps to be taken in order to avoid and reduce any potential adverse effects by taking in the ideas and suggestion of the employees about the proposed change. In the case of employee redundancy, it is your duty to send them the proper notice period. As an employer, you will be required to pay a severance pay because you were the one who ended their contracts.

Below are some employee termination letter templates that you can download and use as references.

Sample Termination for Cause or Voluntary Resignation Letter

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Voluntary Termination

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Probationary Employee Termination

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Staff Reduction Termination Letter

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Job Termination Letter

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Basic Employment Contract Termination

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Mutual Agreement Termination Letter

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Sample Employee Termination Letter with Notice Period for Free

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Lease Termination Letter

A lease termination letter, which is also known as rental termination letter, is used to end or cancel the business contact between the landlord and the tenant. This type of termination letter usually provides a notice to the tenant that the lease arrangement is about to expired or has already expired. And since a lease termination letter should clearly provide and explain the reasons behind the termination of tenancy, it is advisable to seek the services of a qualified real estate lawyer.

Factors that can Cause Termination of Lease

Before a tenant is allowed to rent a dwelling unit that is owned by the landlord, he or she must sign a lease agreement that stipulates the terms and conditions that tenant needs to uphold and honor while inhabiting the property. Its purpose is to legally record the leasing time period, monetary details (monthly rental payment, late payment charges, and utility payment), and the essential information (personal and contact details) of both parties.

To serve a lease termination notice, you must make sure that you have followed the proper procedure and that you have enforceable reasons to cancel the rental contract. That is why when you caught the tenant violating any clause of the contract, then you have the right to serve the tenant a termination notice that you are canceling the tenancy. The following are possible grounds for lease termination:

  • Intentional damage to the property
  • Drug use
  • Failure to settle the monthly rent payment
  • Criminal behavior
  • Exceeding the number of people allowed to dwell in the property
  • Having pets despite the “no pet” clause in the contract

However, if you think that the violation is minor, you should weigh whether the violation committed is worth to spend another time and effort finding new tenants to rent your property. If you think that the violation committed by the tenant is light and forgivable, you may let them off with a warning letter. In this way, the tenant will have a chance to correct or avoid the violation in the future. On the other hand, if you believe that the violation is serious and has been committed for a number of times, then you must consider serving an eviction notice to the tenant.

Consider looking at the following sample lease termination letter templates that are provided below. They can be downloaded for free and you can edit the contents using the proper software and match them to your personal purpose.

Program Lease Voluntary Termination Letter

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Commercial Lease Termination Letter

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Rental Termination Letter from Tenant Download

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Farm Lease Termination

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Printable Termination of Lease Obligation PDF

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Sample Lease Termination Letter Free Download

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Sample Business Lease Termination Letter

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Lease Termination Agreement

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Service Termination Letter

A service termination letter is used by one or two parties to formally end their service provision agreement. Whether you are terminating the services of a freelancer or a supplier, whatever your reasons may be, you must document it by writing a service termination letter. While there are business people who believe that there is no need to write a letter of service termination, writing one comes with legal significance and can protect your business from a potentially expensive lawsuit. As a professional business person, you do not just want to end any service provision without formally notifying the other party. It must be kept in mind that the objective for writing a service termination letter is to nullify any service agreement in a professional and respectable way. You cannot just end any service agreement without any justifiable reasons. Such reasons should be based on legal relevance.

Key Things to Remember When Terminating a Service Agreement

We all know that all contracts are considered to be legally binding agreements between parties that engaged in certain types of business together. In the business world, the role of a supplier, who provides all the necessary materials for your day-to-day operation, is crucial, especially if your business belongs in the manufacturing industry.

Finding a reliable supplier that offers a competitive price is crucial for the success of any business. However, service contract between you and the supplier must be broken or discontinued when the latter fails to meet what was required of them. Let us take for instance that the supplier is constantly delayed in delivering supplies to your company. When this happens, the entire production of your business is gravely affected and there is a huge possibility that you will lose your clients because you are not able to meet their demands. Moreover, it is a smart move to consult a lawyer before ending a service contract.

Found below is a short list of reasons why a service agreement can be terminated:

  • Lack of Capacity – You can legally end your service contract with another party if they lack the capacity to fulfill their obligations to you. When both of you signed the contract or agreement, you expect the other party to have full capacity to deliver what is asked of them.
  • Breach of Contract –  Breach of contract happens when one party (supplier) is unable to perform or stick to the terms stated in the contract. Sadly, you cannot terminate a service contract easily because the other party has violated the contract. The court has to look at a number of factors in order to carefully and thoroughly evaluate whether it is considered as a major or minor violation.
  • Service Disruption – Service disruption can potentially affect and reduce the share price of your company by as much as seven percent on average. While extreme weather conditions and natural disasters hinder the supplier to deliver goods and services to your company, you must make sure that find a supplier that is near the vicinity of your company so that it would not be so tough for the supplier to deliver supplies.

Do not hesitate to browse through the selection of service contract termination letter templates that found below and choose the ones that work best for your purpose.

Download Termination of Services Letter to Customer

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Vendor Notice of Termination Letter

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Vendor Contract Termination Letter

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Vendor Contract Termination Letter

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Termination of Vendor Services Letter Template

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Notice of Termination of Service

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Editable Security Service Termination Letter Template Word Doc

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Download Internet Service Termination Letter Template Example

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Termination of Services Letter to Client Editable

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Business Partnership Termination Letter

Two heads are always better than one that is why in the world of business, you will need someone who you can work hand-in-hand in managing a company. A strategic partnership can be considered to be one of the most vital factors for the growth and success of small and/or start-up business. Even if you have great and brilliant business ideas in mind, there are times when you will need someone who will guide in executing your ideas so they may come into life. In the fierce competition in the business world, you will need a Batman or Robin who will help you stand out from your competitors by boosting the brand of your business and implementing your marketing strategy so that your target customers will get to know your company, as well as your products and/or service, better. Another reason why a partnership is important is that you will not only increase your customer base but also you will be introduced to new products and/or services, have access to a new market, and boost the loyalty of your customers, both new and existing ones.

As much as you want to make your business partnership last for years, your relationship with the other parties can turn sour and you have no choice to but to terminate the partnership contract, especially if they other party becomes irresponsible and has caused negativity on the entire organization.

Common Causes for Ending a Business Partnership

While entering a partnership comes with a lot of great benefits, there are times when misunderstanding and miscommunication can cause parties dissolve their business. Although most of the parties want to establish a long-term business relationship with one another, there are some instances when the partnership is not able to withstand the pressure of time and problems associated with running a company. That is why it is highly important for business partners to develop an exit strategy so that when one party decides to end the partnership scheme, it will not have a grave impact on the integrity of the business and its ability to continue its usual daily business operation. Found below are some of the most common reasons for terminating a business partnership agreement.

  • Mismanagement – A business partner who does not take the business seriously or becomes irresponsible in fulfilling his duties can often put your company at risk for failure. If he or she shows little or no vision for boosting the growth of your business, then it is time to take action and terminate your partnership agreement with the said party before it is too late. It is important to understand that when partners enter a business venture together, they should have an aligned goals so that it will be easier for the concerned parties to achieve whatever goals they want to accomplish.
  • Disagreements – According to the U.S. Small Business Administration, “About 70 percent of businesses make it to their second year and at least 51 percent are still operating by year five”. As much as the statistics showed positivity, it does not guarantee warring parties from dissolving the partnership. One of the most common reasons why partners dissolve their business is unsettled disagreement. Closure of business arises when partners are not able to reconcile about their distinctive roles, undecided about which products and/or services are best for the company or differences over certain issues.
  • Insufficient Cash Flow – We all know that having enough monetary resources is essential to keep the business afloat. Without sufficient cash flow to sustain and support the business through economic turmoil increase your risk of business dissolution. On the other hand, if your company is racking up debt because one of your business partners is inefficient in handling and managing your financial budget, then you will need to discuss the issue with the other parties involved in the partnership and determine the legal steps to terminate the partnership contract with the said party.
  • Mental or Physical Illness – When one of the business partners fell ill either physically or mentally, he or she is obviously incapable of performing and fulfilling his or her duties and responsibilities in the partnership. Although it may be an unfortunate thing to happen, you do not have a choice but to suspend or terminate the said party’s business partnership contract. However, if the said party has disclosed in the partnership agreement who will take over his place in case of retirement, sickness or death, you must make sure to honor what was stipulated in his contract.

Since writing a business partnership termination letter may sound complex, consider checking the following partnership termination letter templates that are given below.

Sample Partner Termination Letter Template Word Format

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Free Sample Partnership Termination Letter Template PDF Format

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Final Thoughts

No matter what your purpose for writing a termination letter is, you must make sure that you have followed all the legal step in canceling a contract or otherwise, you and the reputation of your company will suffer the impact of a lawsuit, and not to mention the effects it can bring financially. If you are unsure about the termination of another party’s contract or agreement, make sure to consult a qualified lawyer so that the correct protocol and legal guidelines in contract termination are fully satisfied.

Now that we have reached the end part of this article, do not hesitate to download and use all the sample documents. You may also check out our termination checklist templates, agreement forms, and termination notice. These templates are professionally created in PDF and Word applications. What is even great is that they all available for free download, easy to print and are highly customizable according to your unique preference. You can make it as a professional reference and incorporate your thoughts when creating different types of termination letters. Should you want to make changes on the parts of the letters, do not hesitate to do it. So what are you waiting for? Browse through our vast library of templates and download them for free!



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