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Free letter template · Word

Non-Renewal Letter

A non-renewal letter tells an employee whose contract could have been extended that the company has decided not to renew it. It gives a brief, neutral business reason, confirms the end date under the existing contract and explains final dues, so the employee is not left expecting an extension.

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Preview of the letter

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[Company Logo][Company Name]

NOTICE OF NON-RENEWAL OF CONTRACT

Ref. No.:
[Reference Number]
Date:
[Date]

To,
[Employee Name]
[Designation], [Department]
Employee ID: [Employee ID]

Subject: Non-Renewal of Your Employment Contract

Dear [Employee Name],

Your current contract with [Company Name] runs from [Contract Start Date] to [Contract End Date]. It was last renewed on [Date]. Clause [Clause Number] of the contract provides that it may be renewed by mutual agreement.

After reviewing our requirements, we wish to inform you that the company has decided not to renew your contract beyond [Contract End Date]. This decision is based on [the completion of the project / a change in client requirements / revised headcount plans for the department] and is not a disciplinary action.

Your employment will therefore end on [Contract End Date]. Until then, all terms of your current contract continue to apply. Please work with [Reporting Manager] on a handover plan and complete exit clearance before your last day.

Your final settlement, including salary up to the last day, eligible leave encashment, statutory bonus and pro-rata gratuity where applicable under law, and approved reimbursements, less applicable deductions, will be paid within [number] days of the end date.

We value the work you have done with us, and you are welcome to apply for suitable openings in the future. A service certificate will be issued to you after clearance.

Yours sincerely,

For [Company Name]
[Authorised Signatory]
[Designation]
Received by
[Employee Name]
Date: [Date]

What this template includes

  • Reference to the current contract and previous renewals
  • Clear decision not to renew
  • Short, neutral reason based on business need
  • Advance notice as required by the renewal clause
  • End date and final dues
  • Option to apply for future roles
  • Courteous tone

When to use it

  • A contract has been renewed before and the employee may expect another renewal
  • The contract has a renewal clause and the company is choosing not to use it
  • Project funding, client demand or headcount plans have changed
  • A consultant or retainer on a renewable agreement will not be extended

How to customise this template

  1. 1Check the renewal clause for any notice of non-renewal required
  2. 2Choose a reason that is accurate and business-related
  3. 3Send it before the notice deadline in the contract
  4. 4Delete the future-roles line if not appropriate

HR tips

  • Communicate in a conversation first, then give the letter
  • Avoid performance criticism unless it was documented earlier
  • Give as much advance notice as possible
  • Be consistent with how similar contracts were treated

Repeated renewals followed by non-renewal can raise questions about the nature of employment. Use this template as a starting point and review it against the contract, applicable labour laws, the Labour Codes and state rules, with a legal adviser where needed.

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Frequently asked questions

Does an employer need to give a reason for not renewing a contract?+

It is often not strictly required, but a brief, honest business reason helps maintain goodwill and reduces disputes.

How much notice should be given for non-renewal?+

Follow the contract. If it is silent, giving a few weeks' notice before the end date is fair practice.

Can a non-renewed employee be rehired later?+

Yes. Non-renewal for business reasons does not prevent future rehire, and many companies say so in the letter.