How to Write an Independent Contractor Termination Letter (Email Templates+Samples)

contract-termination-letter-samples
Contract Termination Letter Sample

Before getting into writing a contract termination letter, it is very important to know how a relationship between an employer and a contractor works. In short, they always sign a contract that contains the details that both parties need to beware of, and the benefits that both parties will get before getting the contractor to perform a specific task for the company. When the contractor is no longer needed in the company or has completed the assigned task, the contract is naturally terminated by means of a termination letter to end said relationship.

A contract termination notice is a written document prepared by the employer to be used to end the business relationship with the contractor, which can be sent in the form of a letter form or an email.

What Is an Independent Contractor Termination Letter?

An independent contractor termination letter is a letter used by the employer to legally notify the contractor of the end of the contract. There are three general types of such a letter:

  • Without a cause: When the company decides to downscale or due to some larger market factors that require it to terminate some contractors to save up the costs.
  • With a cause: When the contractor’s work performance or behavior has not met the expectations or violated the rules multiple times after warnings.
  • End of contract: When the contractor’s contract with the company has come to an end and the employer decides not to renew it.

The two main purposes of a contract termination letter are that it helps the employer keep track of their termination and outsourcing record, and clarifies the statement telling the contractor that the service is no longer needed.

Reasons why a contract termination letter is always necessary:

Not only are contracts legally-binding, but also able to affect the company positively or negatively in various ways. Hence, the following are some of the reasons why there are procedures that must be followed when discontinuing a contract with someone, even if that someone is an independent contractor:

  • Ethical/manners: Regarding ethical issues, no one likes to be terminated without being formally informed. Thus, doing so shows that you have good manners in treating outside contractors.
  • Maintaining a good relationship: Secondly, formally terminating the contract with the contractor means that both of the parties have agreed to end the business relationship without ruining it. You never know whether your paths will cross in the future again or not.
  • Company reputation: A contractor does not necessarily work for a single company. Hence, terminating the contract may result in harming the company’s reputation if the termination procedure is not done right.

Contract Termination Letter Format

Writing an independent contractor termination letter is not much different than writing an employment termination letter. The letter format is as follows:

Details of the employer & contractor
As is the case with any other types of letter, firstly, you need to include the name, address, and contact information of the employer and contractor.

Date of contract termination
In this section, you need to include the date of contract termination. This informs the contractor of the date of the last working day with the company.

Reason(s) for termination
Since you are terminating the contract, you need valid reasons. 

  • Lack of productivity
    The company has the right to terminate the contract when the contractor procrastinates and does not meet the requirements agreed beforehand. 
  • Rule violation
    When signing a contract, there are rules that both parties have to follow. When one party breaks the rules, the contract can be terminated.
  • Criminal behavior
    Stealing from the company or any other criminal actions are ground for termination.
  • Termination by mutual ground
    Although termination may sound bad, having both sides agree to the termination (settlement agreement) is possible. 

List of warnings
The next step is to include the list of warnings (including the dates) that you have given to the contractor before terminating him or her. This shows that he or she had been warned prior to being terminated.

List of items to be handed in
Sometimes, contractors are provided with the company's assets or equipment for work purposes. When terminating the contract, these assets must be returned. Hence, the need to state it in the letter.

Other details
After all the main elements of an independent contractor termination letter have been completed, you may consider adding other minor details that are relevant based on the nature of the contract and service provided. After all, the more detailed the letter, the less chances of having misunderstandings.

Independent Contractor Termination Letter Templates

Contract termination letter template (without a cause)

[Date]
[Employer’s Information]
[City, State, Zip Code]
[Contractor‘s Information]
[City, State, Zip Code]


Dear [Contractor’s name],

Over the past few months, [Company name] has faced financial challenges due to decreased industry demands affecting our overall profitability. Despite our efforts to explore various strategies, such as expanding into different markets and adjusting advertising rates, we regret to inform you that the current economic circumstances have led to a decision to reduce our workforce, affecting approximately [Number] independent contractors.

After careful consideration, we must inform you that your services as a [Position name] are no longer required, and your contract is terminated as of [date]. The HR department will be in touch with you within the next week to discuss the termination process, including details regarding any applicable benefits.

Kindly arrange for the return of any company equipment, documents, or materials that were provided to you during the term of your contract.

We acknowledge and appreciate the contributions you have made during your time with [Company name], and we sincerely wish you success in your future endeavors. Your final payment will be processed in accordance with the terms outlined in your contract, and all previous payments have been duly processed.

If you have any questions or concerns, please feel free to contact the HR department at [HR contact information].


Sincerely,

[Signature]

Independent Contractor Termination Letter Template (with a cause - misconduct)

[Date]
[Employer’s Information]
[City, State, Zip Code]
[Contractor’s Information]
[City, State, Zip Code]


Dear [Contractor’s name],

This letter serves as official notice of the termination of your contract with [Company name], effective as of [date].

Upon conducting a thorough investigation into the significant loss incurred during the [Event name] marketing event, it has come to our attention that you have violated the company’s policy by disclosing product information to other entities. Such a breach is considered an unacceptable violation of our rules and has led to the decision to terminate your independent contractor agreement.

Please make arrangements to promptly return any company equipment, documents, or materials to which you had access during the duration of your contract.

Any outstanding payments for services or work completed prior to the termination will be processed in accordance with the terms and conditions outlined in the agreement. Should you have any inquiries or concerns, feel free to reach out to me at [email address/phone number].

We appreciate the work you have contributed to [Company name] and regret that this action has become necessary due to the aforementioned policy violation.


Sincerely,

[Signature]

Independent Contractor Termination Letter Template (with a cause - poor performance)

[Date]
[Employer’s Information]
[City, State, Zip Code]
[Contractor’s Information]
[City, State, Zip Code]


Dear [Contractor’s name],

This letter serves as confirmation of the termination of your independent contractor engagement with [Company name] due to performance issues, effective as of [date].

During the [Duration] you spent in the [Department name] department, it has become evident that your performance has consistently fallen below the expected standard for more than [duration]. Despite receiving warnings on [Date] and [Date], addressing recurring mistakes and emphasizing the necessity of reviewing your work, there has been insufficient improvement. Despite the opportunities provided to enhance your performance, the desired progress has not materialized.

Effective immediately, you will no longer be assigned any further tasks. We appreciate the effort you have put forth during your tenure, but unfortunately, the performance concerns have led to this difficult decision.

Kindly make arrangements to return any company equipment, documents, or materials that were provided to you during the term of your contract.

Any outstanding payments for services or work completed before the termination will be processed in accordance with the terms and conditions outlined in the agreement. If you have any questions or require further clarification, please do not hesitate to contact me at [email address/phone number].

We wish you the best in your future endeavors.


Sincerely,

[Signature]

Independent Contractor Termination Letter Template (end of contract)

[Date]
[Employer’s Information]
[City, State, Zip Code]
[Contractor’s Information]
[City, State, Zip Code]


Dear [Contractor’s name],

I hope this letter finds you well. This letter serves as formal notice that, in accordance with the terms and conditions outlined in our Independent Contractor Agreement dated [insert date of the agreement], your engagement with [Company Name] will be terminated upon the completion of the contract period, as mutually agreed upon.

The termination will be effective as of [insert agreed-upon contract end date]. We would like to express our appreciation for the valuable contributions you have made during the course of this agreement. Your professionalism and dedication have been instrumental in the successful completion of the assigned tasks.

As the contract comes to an end, we kindly request that you wrap up any remaining work or deliverables by the termination date. Additionally, please ensure that all company property, documents, or materials in your possession are returned to [contact person or department] by [insert deadline].

Any outstanding payments for services rendered up to the termination date will be processed in accordance with the payment terms specified in the agreement.

We value the professional relationship we have built with you and wish you continued success in your future endeavors. If there are opportunities for collaboration in the future, we would welcome the chance to work with you again.

If you have any questions or need further clarification, please do not hesitate to contact [insert your contact information].


Thank you once again for your contributions, and we wish you all the best in your future endeavors.


Sincerely,

[Signature]

Independent Contractor Termination Letter Samples

Letter for Independent Contractor Termination Sample 1

July 12th, 2023

Lavinson Dickinson, CEO
29 Jockey Hollow Dr.
West Deptford, NJ 08096

Carla Johanson
156 North Catherine Ave.
Chesterton, IN 46304

Dear Ms. Johanson,

This letter serves as notice to inform you that we will be concluding our engagement with you as an independent contractor with GKK Co., effective as of the 20th of July, 2023.

After a careful review, it has been observed that the consistency of your performance in submitting projects for review has been a concern. Several errors have been identified, requiring corrections, and, unfortunately, some of these mistakes have led to significant misunderstandings between our customers and the company. Having been with the company for 14 months, it is regrettable to note that your attention to detail has not improved since the last notice sent to you on the 15th of June, 2023.

As a result, we kindly request that you return any company equipment and documents to which you had access during the term of your contract. You may collect your personal belongings on your last day.

Any outstanding payments for services or work completed prior to the termination will be processed in accordance with the terms and conditions outlined in the agreement. If you have any questions or require further information, please feel free to contact me at [email protected].

We appreciate the efforts you have contributed during your time with GKK Co., and we wish you success in your future endeavors.

Sincerely,
Lavinson Dickinson

Letter for Independent Contractor Termination Sample 2

5th Oct 2023

Samantha Wu, CEO
215 Fawn Lane
Hallandale, FL 33009

Peggy Soh
7644 Elm St.
Titusville, FL 32780

Dear Ms. Soh,

MPH would like to notify you that our engagement as an independent contractor is terminated, effective as of 14th Oct 2023.

We have observed instances of missing inventory from the records, and upon investigation, it has come to our attention that you are responsible for the discrepancies. Theft or misappropriation of company property is a direct violation of our policies, and such behavior cannot be tolerated.

We kindly request that you promptly return any company equipment and inventory to which you had access during the term of your contract. Alternatively, if the missing inventory cannot be returned, we expect compensation for the full value of the items taken from the retail store.

Any outstanding payments for services or work completed before the termination will be processed in accordance with the terms and conditions outlined in the agreement. If you have any questions or require further clarification, please do not hesitate to contact me at [email protected].

We regret the necessity of this termination and wish you success in your future endeavors.

Sincerely,
Samantha Wu

Tips on How to Write an Independent Contractor Termination Letter

1. Clearly list reasons for termination with evidence (if any)

Terminating a contractor without a valid reason may ruin the company’s reputation. If you plan to end the relationship, you need a valid reason.

2. Express appreciation and regret professionally

Writing an independent contractor termination letter means you will be losing a hand. Hence, you should express your appreciation for the contractor’s contribution and regret for having to let him or her go professionally to keep up a good relationship.

3. Remember to say thanks

Although you are going to terminate the contract, you should always express gratitude. Expressing gratitude at the end of the letter shows your appreciation for the contribution that the contractor has made. 

4. Do not use sarcasm, jokes, or inappropriate language

No matter what reasons caused the contractor to be terminated, you should still maintain a professional tone in the letter writing. This is because you might be meeting him or her in the future, and you wouldn’t want to end the business relationship unprofessionally.

5. Create a formal subject line when writing or sending a letter via email

Sometimes, you might have a contractor who works from home, making you unable to send the contract termination letter to him or her in person. In this case, a professionally written subject line is required to make the email clear.

Example: Contract Termination of Services for Cango Business Co.

Key Takeaways

  • Using a professional and calm tone when writing an independent contractor termination letter is necessary.
  • The core elements of an independent contractor termination letter are the date of termination, reason for termination, list of warnings, and list of items that need to be returned.
  • Remember to show appreciation for the contractor’s contribution.
  • State everything clearly to avoid misunderstandings.

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— Originally written by Ryan Goh —

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