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Severance Letter Template for Australia

A Severance Letter is a formal document used in Australian employment law to communicate and document the terms of an employee's separation from employment. It outlines the termination details, including the effective date, financial entitlements, severance pay calculations, and other relevant terms in accordance with Australian employment legislation, particularly the Fair Work Act 2009. The document serves as an official record of the termination arrangement and typically includes details about final payments, continuing obligations, and the return of company property.

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What is a Severance Letter?

A Severance Letter is a crucial document in Australian employment practice used when terminating employment relationships, whether through redundancy, mutual agreement, or other circumstances. The letter serves as an official record of the separation terms and ensures compliance with Australian employment law, particularly the Fair Work Act 2009 and National Employment Standards. It typically details the termination date, notice period, severance pay, final entitlements, and any continuing obligations. The document is essential for both legal compliance and clear communication, helping prevent future disputes and ensuring both parties understand their rights and obligations. A well-drafted Severance Letter should account for all applicable legal requirements while maintaining professionalism and clarity.

What sections should be included in a Severance Letter?

1. Date and Address Block: Current date and full contact details of both employer and employee

2. Formal Salutation: Professional greeting addressing the employee by name

3. Confirmation of Termination: Clear statement of employment termination, including effective date and reason

4. Notice Period Details: Information about notice period or payment in lieu of notice

5. Final Payment Information: Overview of final salary, accrued leave, and other entitlements

6. Severance Package Details: Breakdown of severance payment calculation and terms

7. Return of Company Property: List of items to be returned and process for return

8. Continuing Obligations: Reference to ongoing confidentiality and intellectual property obligations

9. Contact Information: Details for handling queries and next steps

10. Signature Block: Space for authorized signatory and title

What sections are optional to include in a Severance Letter?

1. Outplacement Services: Details of career transition support, if offered

2. Reference Provision: Terms of employment references to be provided

3. Non-Disparagement Clause: When mutual non-disparagement terms are required

4. Benefits Continuation: If any benefits will continue post-employment

5. Release of Claims: When a release of legal claims is being sought

6. Garden Leave: When applicable for senior positions

7. Post-Employment Restrictions: For positions with non-compete or non-solicitation requirements

8. Share/Option Treatment: For employees with equity compensation

What schedules should be included in a Severance Letter?

1. Schedule A - Payment Calculation: Detailed breakdown of all payment components including base salary, leave entitlements, and severance calculation

2. Schedule B - Company Property Checklist: Itemized list of company assets to be returned

3. Schedule C - Benefit Details: Comprehensive information about benefit termination dates and conversion rights

4. Schedule D - Tax Summary: Overview of tax treatment for different payment components

Authors

Alex Denne

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

Jurisdiction

Australia

Publisher

Genie AI

Document Type

Severance Agreement

Cost

Free to use

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