Employee Separation and Release Agreement

An employer can use an Employee Separation Agreement to protect against liability.

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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.

What Is an Employee Separation Agreement?

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.

Other Names for Employee Separation Agreement

Depending on your state, an Employee Separation Agreement may also be known as:

  • Employment Separation Agreement
  • Separation and Release Agreement
  • Release Agreement

Who Needs an Employee Separation Agreement?

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.

Why Use 360 Legal Forms for Your Employee Separation Agreement

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Create your own documents by answering our easy-to-understand questionnaires to get exactly what you need out of your Employee Separation Agreement.

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How to Create an Employee Separation Agreement with 360 Legal Forms

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.

Let 360 Legal Forms help with our extensive library of attorney-vetted legal forms. The process is fast and easy. All you have to do is fill out our easy-to-understand questionnaire. Once complete, simply download your form as a PDF or Word document from your secure online account.

What Information Will I Need to Create My Employee Separation Agreement?

To create your document, please provide:

  • Employer Information: The legal name of the company, location, and governing state
  • Employee Information: The legal name of the employee involved and the contact information
  • Effective Date: The date on which the separation is to go into effect
  • Waiver of Claims: An acknowledgment the employee agrees not to sue the employer in the future
  • Contact Person: A designated individual in the company who is signing the agreement
  • Severance Package: The benefits offered to the employee in return for signing the agreement
  • Additional Clauses: Non-compete, non-disclosure, and non-disparagement clause

Employee Separation Agreement Terms

  • Indemnification: Protected from any liability or damage
  • Misconduct: Improper work-related behavior or mismanagement
  • Revocation: The cancellation of a decision
  • Severance Package: A collection of monetary and non-monetary benefits that an employee receives after leaving the company
  • Resignation: A decision by the employee to leave their job
  • Termination: A decision by the employer to fire the employee
  • Non-Compete: An agreement to not compete with the employer, usually in the same industry
  • Non-Disclosure: An agreement to not share sensitive and proprietary data
  • Non-Disparagement: An agreement to not speak negatively about the employer in public
  • At-Will Employment: The state of a company entitled to fire anyone for any reason and without warning, unless it is illegal to do so

Employee Separation Agreement Signing Requirements

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.

What to Do with Your Employee Separation Agreement

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.

Frequently Asked Questions

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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Applicable to all 50 states
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