Termination letter format for India

Termination Letter format

The full text of this document as VidhiSar drafts it, with every blank shown in square brackets. Copy it or download it as a Word file and fill it in yourself — or answer a few questions and VidhiSar fills it in and prints a formatted PDF. Clauses that apply only in some cases are left out here; the drafting flow adds them when your answers call for them.

Related statutory compliance tools & calculators

• Gratuity Calculator India — Calculate statutory 15/26 gratuity under the Code on Social Security, 2020

• Gratuity Calculator India

What this document must contain (Clause-by-Clause Matrix)

• The last working day — One unambiguous date. Everything else — settlement, access revocation, benefits — is calculated from it.
• The basis for separation, stated factually — Redundancy, performance, resignation accepted, probation not confirmed. Record the basis without characterising the person, and make sure it matches whatever documentation preceded it.
• Notice given or pay in lieu — State which, and the period. A notice obligation that is settled in cash should say so explicitly.
• Final settlement components and timeline — Salary to the last working day, leave encashment, gratuity where payable, less recoveries. The wages are due within two working days of the last day under section 17(2) of the Code on Wages, 2019, so the letter should promise that, not a 30- or 45-day settlement cycle.
• Return of company property — Devices, access cards, documents, credentials. List categories and give a date.
• Continuing obligations — Confidentiality survives employment. Restating it at exit is what makes it enforceable in practice rather than merely true.
• Acknowledgement block — A signed acknowledgement of receipt closes off the argument that the letter was never delivered.

When you need this

• On any employer-initiated separation, whatever the reason
• When accepting a resignation, to confirm the last working day and settlement
• Where a role is being made redundant and the basis needs to be on the record
• At the end of a probation period that will not lead to confirmation
• Whenever continuing confidentiality obligations need restating at exit

The law that governs it

• Code on Social Security, 2020 — gratuity (s. 53) — Where the chapter applies and the qualifying period of continuous service is complete, gratuity is payable on separation, subject to the forfeiture provisions in section 53(6). It should appear as a line in the settlement rather than as an afterthought, and it must be paid within thirty days (section 56(3)).
• Industrial Relations Code, 2020 — For workers as the Code defines them, retrenchment carries its own notice, compensation and, in larger establishments, prior-permission requirements. Whether an employee is a worker is a question of function, not job title, and it is worth confirming before acting. The Code replaced the Industrial Disputes Act, 1947 on 21 November 2025.
• Shops and Establishments legislation — Notice requirements on termination are State-specific for establishments covered by the applicable State Act, and may exceed what the contract states.

Common mistakes

• Stating a reason in the letter that no prior document supports
• Characterising conduct in language that goes beyond what was actually recorded at the time
• Treating every employee as outside the Industrial Relations Code without checking whether they are a worker as it defines one
• Leaving the final settlement date open, which is where most post-exit disputes begin
• Saying nothing about continuing confidentiality obligations

Frequently asked questions

What notice period applies on termination in India?

It depends on the contract and on the applicable State Shops and Establishments legislation, which may prescribe a minimum that the contract cannot reduce. For employees who are workers under the Industrial Relations Code, 2020 — which replaced the Industrial Disputes Act on 21 November 2025 — separate statutory requirements apply to retrenchment. Confirm which regime governs before fixing the notice.

Is gratuity payable on termination?

Where the Code on Social Security, 2020 applies to the establishment (ten or more employees) and the employee has completed five years of continuous service, or one year on a fixed-term contract, gratuity is payable on separation. It can be forfeited only in the circumstances section 53(6) sets out, and it must be paid within thirty days of falling due.

Do I have to give a reason for termination?

Practically, yes — record one, and make sure it is supported by whatever documentation preceded it. A letter that gives no basis, or a basis inconsistent with the earlier record, is materially harder to defend if the separation is later challenged.

When must final settlement be paid?

The wages within two working days of the last working day: section 17(2) of the Code on Wages, 2019 says so for an employee who is removed, dismissed or retrenched, or who resigns. Gratuity, where payable, is due within thirty days of becoming payable under section 56(3) of the Code on Social Security, 2020. A contract can shorten these periods but not lengthen them, so state a definite date in the letter and meet it.

Related documents

• Employee Warning / Show-Cause Letter
• Relieving Letter & Experience Certificate
• Full & Final Settlement Statement
• All templates

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