Going through employment termination can be complicated for both the employee and employer. Whatever the reason for the ending, the employer may choose to offer an Employee Separation Agreement to the particular employee.
This agreement is mutually beneficial in that it implies the absence of rancor about the situation. More importantly, the employee waives their right to file a wrongful termination lawsuit in the future.
The Employee Separation Agreement doesn't have to involve any severance package or monetary compensation for the employee, mostly if there was misconduct or a dispute that led to the termination.
In other cases, if the employer is to terminate the contract at-will, it may offer a severance package. Both parties usually negotiate the terms of the Employee Separation Agreement. Creating an Employee Separation Agreement is essential to get to the point and include enough details.
Depending on your state, an Employee Separation Agreement may also be known as:
Virtually, both the employer and employees can benefit significantly from an Employee Separation Agreement. As an employer, if you're terminating the contract of an employee who could potentially have a claim for wrongful termination, it's good practice to offer a separation agreement. This may also make sense for companies to provide separation agreements for the employees that are getting laid off.
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Your Employee Separation Agreement must contain all the necessary details regarding the employer and the employee. It should also include essential clauses for the protection of both parties. The best way to not leave anything out is to work off a proven template.
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For it to be legally binding, both the employer and the former employee must sign the Employee Separation Agreement. If not, it is implied that one or both parties do not accept the terms. Notarization is not required.
Both the employer and the employee should have a signed physical copy of the Employee Separation Agreement. The employer should keep in the company's records or the HR department.
Unless your contract has specific provisions, most hiring and firing in the United State is done at will, subject to employment discrimination laws. As you know, US laws criminalize terminating employment based on the discrimination of race, disability, age, religion, sexual orientation, gender, or national origin.
Both termination and separation mean that the employer has decided to let go of the employee. However, a separation is an agreement in good faith and it includes a severance package. A termination does not. However, the Employee Separation Agreement can come as an addition to the termination agreement, if circumstances are appropriate.
The short answer is yes, you can. Under the US Employment Act, all employers have to provide a "Revocation Period" for former employees even after signing the Employee Separation Agreement. For employees under 40 years of age, that period is seven days. And those above 40 have three weeks to change their mind. However, if that’s the case, they will also have a duty to return the severance package received.
From the employer's perspective, not having an Employee Separation Agreement comes with legal vulnerabilities. If the former employee left disgruntled, he or she might come around to sue the employer for wrongful termination, which can be less likely to succeed in the presence of a separation agreement. And the employee, not having an Employee Separation Agreement means the absence of a severance package.
Getting a legal professional to evaluate your separation agreement could be a good idea. If you have a good understanding of your former employer and your terms are clear, you might not need one after all. Hiring a law firm is probably the best decision if you're negotiating a separation agreement during the hiring process. Companies may use the Employee Separation Agreement as a hiring perk, for instance.
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