Termination Letter - Consultant

What is a termination letter?

Consultancy agreements normally state that the company can terminate the consultancy agreement by giving notice to the consultant in writing. This letter can be used to satisfy this requirement. It is suitable for use in a number of situations, including where the consultant is an individual, or where they are providing their services through a limited company. 

It sets out the payments that are owed to the consultant, and it reminds the consultant about the ongoing obligations in their consultancy agreement - for example those relating to confidentiality, and post-termination restrictions (also known as “restrictive covenants” or “non-competes”). 

Why is a termination letter important?

If the contract states that notice of termination must be given in writing, a letter should be given to the consultant in order to terminate the consultancy agreement. Even if there is no requirement for written notice, it is good practice to confirm the termination in writing, to avoid any disputes about whether notice was properly given. 

The termination letter is also important to explain any payments owed to the consultant and also to remind the consultant of any ongoing contractual obligations that apply to them (for example relating to confidentiality or post-termination restrictions).

This letter asks the consultant to sign and return it. This helps provide evidence that the consultancy agreement has been properly terminated, and that the consultant is aware of their ongoing obligations.

What are the common pitfalls of a termination letter?

1. Not having a termination letter
   If no termination letter is issued, there may be a dispute about whether notice has actually been given, and therefore when the consultancy will terminate. There may also be a dispute about what was agreed with regards to working arrangements during the notice period.
   
   

2. Using the wrong termination letter
   This letter is suitable for terminating a consultancy agreement with a consultant. It is not suitable for terminating an employee’s employment. In that case, the Termination Letter should be used.
   
   

3. Losing the signed copy
   Without a signed copy of the termination letter, there is no evidence of when the consultancy agreement was terminated. Signed contracts and letters can quickly and easily be saved on the PocketLaw platform so that they are securely stored.