Free Employee Separation and Release Agreement

An agreement that (i) details the end of the employment relationship between employee and employer and (ii) releases all potential claims the employee may have in exchange for some form of severance.

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When personal friendships end, the separation process may include “unfriending” and “unfollowing” on social media. For an employer, “separating” from an employee has its own set of formalities. The decision to terminate may be difficult, but using an Employee Separation and Release Agreement may make the aftermath of termination easier for both parties.

Frequently Asked Questions

 

 

An agreement that (i) details the end of the employment relationship between employee and employer and (ii) releases all potential claims the employee may have in exchange for some form of severance.

This agreement is designed to be used by employers for instances when an “at-will” employee is terminated. The separation and release agreement may be alluring because it releases the employer from all claims or liability related to the employee’s termination  

  • “At will” employment is the default for employment contracts. In “at will” employment, the employee can be dismissed by the employer for any proper reason at any time. Likewise, the employee can decide to terminate employment at any time and for any reason. An employee will be “at will” unless there is a provision in their contract guaranteeing employment for a specific duration of time. 

  • This agreement is probably inappropriate for “guaranteed term” employees, as their original contract will usually contain conditions for their termination that must be specifically adhered to. 

 

To create your agreement, provide:

  • Employer Details: Give the name and number of employees of the company

  • Employee Details: Provide the name of the employee and indicate whether they are over 40.

  • Consideration: To persuade the employee to sign the employee separation agreement and give up any potential legal claims, they will need some form of compensation. Monetary compensation in exchange for the employee’s signature on this separation agreement will require the completion of a 1099 form. 

  • Designated Recipient: Specify whether there is a specific person designated in your company that will be receiving the signed agreement.

  • Final Paycheck: If any amount is still owed to the employee (from paychecks or commissions), specify that in the agreement.

  • Confidentiality Clause: This agreement contains a confidentiality clause, which prohibits the former employee from disclosing the terms of the agreement, as widespread knowledge of the agreement may harm the company’s reputation. 

    • An optional aspect of the confidentiality clause is the liquidated damages provision. These liquidated damages are essentially a “fine” levied on the employee every time they disclose the terms of the agreement to a member of the public. 

      • Be aware, however, some states will not enforce liquidated damages provisions on public policy grounds.

 

By signing this agreement, the employee releases the employer from all claims, actions and causes of action from any act that happened during employment, including wrongful termination and acts of discrimination.

  • Although the waiver does not interfere with the ability of the terminated employee from filing a claim with the Equal Employment Opportunity Commission and other labor related groups, the right to recover damages from such proceedings is waived.

  • Age Discrimination in Employment Act of 1967 (the “ADEA.”) – If the employer has 20 or more employees, and the employee is 40 or older, then the agreement will have provisions regarding the waiver of any potential ADEA claims.

    • Incorporating the ADEA waiver into the agreement affects the timing of the agreement’s execution. The employee must be given a period of 21 days to sign the agreement. Then, after execution, the employee has a period of 7 days to revoke their signature free of consequence.

 

  • If your company has 20 or more employees AND the employee is over 40. Yes, in order to comply with the Age Discrimination in Employment Act of 1967,  the separation agreement states that the employee has seven days to back out of the agreement.

  • Otherwise. No, once the employee signs the agreement, it is legally binding.

 

 

Our propriety form generator will assist you in creating your customized Employee Separation Agreement within minutes. Answering the questions is not complicated – you only fill in the requested information and we will put it together for you.

 

Once you complete the questionnaire and place your order, it will be available for immediate download in either PDF or Word document from your secure online account including a step-by-step guide on how to use your document. 

 

Generally, an employee separation agreement does not need to be notarized – you only need to sign the document to make it legally enforceable. A witness may be helpful in the event the agreement is ever challenged, but a notary is not necessary

 

Please Note: The use of a notary ensures that no one challenges any signatures later and is a secure way to firmly establish the effectiveness of your document.