Make your free

Severance Agreement

Worldwide Compatabilty - USA, Canada, UK & Australia etc.

Create Document

Download for Word (.doc) or Adobe (.pdf).

Free Severance Agreement Template

Author Photo
Document and article by on November 7, 2023 Written by Easy Legal Docs Editorial Team

Navigating the end of an employment relationship can be smoother with a Severance Agreement. Read on to understand its essentials and access a straightforward, downloadable template to get started.

What is a Severance Agreement?

At its core, a Severance Agreement is a contract between an employer and an employee. It outlines the terms and conditions of an employment termination, typically when an employee is laid off or let go for reasons other than misconduct.

More than just a document, it’s a safety net and a sign of mutual respect.

Why Should You Consider a Severance Agreement?

If you’re an employer, offering a Severance Agreement can demonstrate that you value your employees, even when parting ways. For employees, it provides clarity and a certain level of assurance during an uncertain period.

Key Components of a Severance Agreement

Understanding the main elements of a Severance Agreement can help both employers and employees navigate the end of an employment relationship with clarity. Here are some vital components:

  • Severance Pay: Typically, this involves a lump sum or a series of payments provided to the departing employee. The amount is often determined based on factors such as the employee’s tenure, job role, and the nature of their exit.
  • Benefits Extension: Besides monetary compensation, employees might continue to receive certain benefits like health insurance, retirement contributions, or other perks for a set duration after leaving.
  • Release of Claims: A crucial component that safeguards employers. By agreeing to this, employees usually commit to refraining from legal actions against the company concerning their employment or its termination.
  • Confidentiality and Non-Disparagement: These clauses protect a company’s proprietary information and reputation. The employee agrees to keep sensitive information confidential and abstain from making negative comments about the company.
  • Property and Information Return: This stipulates the process for handing back company property, like electronic devices or badges, and ensures any sensitive or proprietary data in the employee’s possession is returned or deleted.

Grasping these core elements ensures that both parties are on the same page and can move forward with transparency and mutual respect.

Additional Provisions to Note

It’s not all about money. There are often clauses in a Severance Agreement that deal with future interactions and obligations:

  • Non-Disparagement: This clause ensures both parties part on good terms, with neither making negative remarks about the other.
  • Confidentiality: Here, the departing employee agrees to keep company secrets, well, secret!
  • Property Return: It outlines how company-owned items like laptops or ID cards should be returned.

How to Fill Out and Use the Free Severance Agreement Template

Navigating the end of an employment relationship can be straightforward with our free Severance Agreement template. Here’s a step-by-step guide to help you fill it out correctly:

Step 1: Enter the Agreement Date

Begin by filling out the [AGREEMENT DATE] which is the date when this agreement becomes effective. For example: March 10, 2023.

Step 2: Provide Names of Both Parties

You’ll need to specify the names of the parties involved:

  • Replace [EMPLOYEE NAME] with the full name of the employee. For instance: John Doe.
  • Similarly, replace [EMPLOYER NAME] with the name of the company or employer. Example: TechCorp Inc..

Step 3: Define the Termination Date

State the exact date when the employee’s association with the company will officially end by filling in the [TERMINATION DATE]. This might be March 30, 2023, for instance.

Step 4: Determine the Severance Amount

Specify the compensation the employee will receive after the termination by replacing [SEVERANCE AMOUNT]. This could be a lump sum amount like $20,000 or any agreed-upon figure.

Step 5: Address Non-Disparagement

This section ensures that the employee won’t make negative comments about the employer or its associated individuals, products, or services.

Step 6: Understand Liability Release

The employee, by signing, agrees not to hold the employer liable for any claims, making it a critical aspect of the agreement.

Step 7: Clarify Non-Solicitation Terms

This segment dictates that the employee will not persuade or approach any of the company’s employees to leave or join another entity for a span of 5 years.

Step 8: Handle Company Property

Ensure that all company property in the employee’s possession, including confidential information, is returned by the specified Severance Date.

Step 9: Emphasize Confidentiality

The employee agrees to keep the agreement’s details a secret for 5 years, reinforcing the importance of discretion.

Step 10: No Admission of Liability

This section is a reminder that the agreement isn’t an admission of any wrongdoing by the employer.

Step 11: Finalize the Agreement’s Governing Law

Replace [JURISDICTION] with the relevant jurisdiction, such as California, to state where the agreement’s laws and regulations apply.

Step 12: Signatures

Both parties, the employee and the employer, need to sign, print their names, and date the agreement at the end, signifying their acceptance of the terms.

Once all these steps are complete, ensure that both parties receive a copy of the signed Severance Agreement. It’s always wise to consult with a legal expert before finalizing any agreements to make sure all parties’ interests are protected.

Did you find this helpful?

Document Sample

Severance Agreement Template

Below you can see a sample of the Severance Agreement template:

Template Severance Agreement

Severance Agreement FAQs

What is the purpose of this Severance Agreement template?

The template serves as a structured format for employers and employees to agree on terms regarding the end of their working relationship. It ensures clarity on aspects like severance pay, responsibilities, and conditions post-termination.

What does the 'Non-Disparagement' clause entail?

The 'Non-Disparagement' clause ensures that the departing employee refrains from making negative remarks or statements about the employer, its associated products, or services.

Can the Severance Agreement include non-monetary benefits?

Yes. While the template specifies a monetary amount, you can adjust the agreement to include other compensations, such as extended health benefits or stock options, provided both parties agree.

Is the "Liability Release" clause mandatory?

While highly recommended for the employer's protection, including this clause is at the discretion of both parties. It prevents the employee from making claims or holding the employer liable post-termination.

Why is there a "Non-Solicitation" clause?

The "Non-Solicitation" clause is to prevent the departing employee from encouraging other employees to leave the company or join a competitor. It aims to protect the employer's workforce stability and trade secrets.

What happens if company property isn't returned by the Severance Date?

Failure to return company property by the specified date can lead to legal actions or withholding severance payments until the property is returned. The exact repercussions should be clarified in the agreement or discussed between the parties.

Can this template be customized further?

Yes. While this template provides a comprehensive structure, it's essential to tailor the document to the specific needs of both parties. It's advisable to consult with legal counsel to tailor it to your business and ensure that it complies with the laws that govern your jurisdiction.

Create Your Free Severance Agreement Online

Create Online

Or choose a file format:

Download .doc Download .pdf Google Docs

Looking for Something Else?

There are plenty of templates to choose from, and we're adding more each week!