How to Write a Non-Renewal Letter

When notifying an employee, supplier or policy holder that their contract is not being renewed, you'll need to send a non-renewal letter. Writing this letter with tact and professionalism can facilitate an amicable separation, not to mention saving time and heartache. This is a somewhat tricky maneuver; the non-renewal letter must be balanced between a firmly stated position and sensitivity to the recipient's emotions.

Clearly state your purpose. Ambiguity can open the door for confusion later on. After stating the name of the business or organization in question, explain that the reader is being non-renewed. For more sensitive matters, such as a work position, the letter should follow a phone call or personal meeting explaining briefly the reasons for non-renewal.

Example:

You are receiving this letter because you currently supply us with a monthly coffee service for our office that we must cancel effective next month.

Give an honest reason for non-renewal. Your recipient deserves a valid explanation for the decision. In many cases, the reason can be as simple as a change in policy, budget cuts, or regular termination of the position. If the decision was based on poor performance, say so with an example. Avoid cattiness or overly accusatory statements; instead, remain calm and professional. Be sure you have specific incident reports to back up any statements of wrongdoing or poor performance should the decision come into question.

Example:

You are being non-renewed because of your performance in the work capacity, particularly in terms of punctuality and commitment to the job.

Explain the options available to the recipient. For a policy change, give alternatives and a specific date of termination. In a workplace or supplier contract non-renewal, it is critical to not only give a time frame, but instructions pertaining to remaining vacation time and responsibilities. This is also an opportunity, should you choose, to inform the recipient about the process for appealing the non-renewal. Provide contact information for the person in charge of that process or a link to the appropriate website for further information.

Example:

Please note that your service with us will terminate effective February 1. While we don't currently need your services, we may in the future as our budget expands, so please be sure to check back with us later in the year as we reevaluate our needs.

Be courteous. In many cases, a non-renewal comes as a surprise to the recipient, and it can be a tough letter to read as it often represents a major life or revenue change. Thank the employee, policy holder or supplier for their time and contributions to the business and, where appropriate, wish them luck in their future endeavors. Do not, however, allude to any misgivings or doubts about the decision, as this may suggest to the recipient that he or she should contest the decision, or even take it to court.

Example:

Thank you for the valuable contribution you've made to our business. We wish you luck on future endeavors.

Sign the letter with your name and position. Give your title and contact information so that the recipient will understand your authority in the decision and will be able to reach you with questions. If you are simply reporting a policy change, add that the non-renewal is in accordance to that policy, and attach it for reference.

If you have a written contract with the person or service you are choosing to not renew, be sure to read the fine print. There may be specifics about how and when you can terminate the contract that you must follow so you don't run into a breach of contract situation. If it's an automatically renewing contract, such as that for a monthly service, put in writing your request to terminate and send it to the appropriate department. Make sure to include the date you wish to terminate service. It's up to you if you'd like to include the reason why. If you don't cancel before the renewal period, you may be stuck with a termination fee, so make note of any deadlines to cancel when you enter into an automatically renewing contract.