The decision comes with the club sitting 10th in the table and a point of the play-offs after winning three of their opening six matches. That is despite having to play their opening eight fixtures away from home due to work on the pitch at the Citadel.
Donaldson led the side to safety on the final day of last season following a 2-0 win against Buxton.
Director of football Pav Singh will now take over as manager with assistance from Chris Atkinson and Conor Branson.
“The club would like to announce the departure of Clayton Donaldson as head coach, along with his assistant head coach Danny Ellis,” stated an official statement.
“Although many contributing variables are taken into account when making decisions of this nature, the board’s ultimate goal is to advance and secure the future of Farsley Celtic FC. Our allegiances are and will always be there.Both Danny and have active club player registrations, which we continue to hold.
“I want to use this chance to express my gratitude to Danny and Clayton for their efforts and to wish them luck in all of their future endeavours.”
Donaldson, who was in his first management role at Farsley Celtic, made 55 appearances for Bradford City and scored eight times during a two-year spell.
The striker also had spells with Bolton Wanderers, Birmingham and Crewe among others before dropping into the non-league pyramid.
Farsley Celtic return to action this evening when they travel to Southport FC.
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