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Employee Severance Letter Template for England and Wales

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Key Requirements PROMPT example:

Employee Severance Letter

"I need an Employee Severance Letter for a senior software developer who is being made redundant effective March 15, 2025, including a 3-month garden leave period and enhanced severance package of 6 months' salary."

Document background
The Employee Severance Letter serves as a crucial document in employment termination processes within England and Wales. It is typically used when an employer and employee agree to end their employment relationship, whether through redundancy, mutual agreement, or other circumstances. The letter documents all essential aspects of the severance arrangement, including financial terms, timing, and ongoing obligations. It must align with UK employment legislation and often forms part of a broader termination package that may include a settlement agreement. This document is particularly important for ensuring clarity and legal compliance in employment separations.
Suggested Sections

1. Employee Details: Full name, position, start date, and employee number

2. Termination Date: Clear statement of the last day of employment and effective termination date

3. Severance Payment: Amount of severance payment, calculation basis, payment timing and tax treatment

4. Final Salary and Benefits: Details of final salary payment, accrued holiday pay, and treatment of benefits

5. Company Property: Requirements for returning company property and timeline

Optional Sections

1. Garden Leave: Terms of garden leave period, if applicable, including duration and conditions

2. Reference Provision: Terms and conditions regarding future employment references

3. Outplacement Support: Details of any career transition or outplacement services being offered

4. Non-Compete Clauses: Reminder of any post-employment restrictions from employment contract

5. Continuing Obligations: Reminder of ongoing confidentiality and intellectual property obligations

Suggested Schedules

1. Schedule 1 - Payment Calculation: Detailed breakdown of severance payment calculation

2. Schedule 2 - Benefits Summary: Comprehensive list of benefit terminations and continuation options

3. Schedule 3 - Company Property Checklist: List of company property to be returned

4. Appendix A - Settlement Agreement: If applicable, the formal settlement agreement requiring signature

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions




















Clauses




















Industries

Employment Rights Act 1996: Primary legislation covering statutory notice periods, redundancy payment calculations, protection of employment rights, and unfair dismissal provisions

Equality Act 2010: Legislation ensuring protection against discrimination and requiring severance terms to be non-discriminatory based on protected characteristics

Age Discrimination Act 2006: Specific legislation addressing age-related terminations and benefits considerations in employment

National Minimum Wage Act 1998: Ensures final payments and calculations comply with minimum wage requirements

Income Tax Act 2007 and PAYE Regulations: Governs tax treatment of severance payments, including the £30,000 tax-free threshold for genuine redundancy payments

Employment Protection (Consolidation) Act 1978: Provides framework for basic employee protections during termination

GDPR and Data Protection Act 2018: Regulates handling of personal data and privacy considerations during the severance process

Companies Act 2006: Governs corporate authority requirements for severance agreements

Contracts of Employment Act 1963: Covers contractual obligations and notice period requirements in employment relationships

Working Time Regulations 1998: Regulates holiday pay calculations and accrued leave considerations in severance situations

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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