Employee Separation Agreement (Guide & Free Templates)

Employee Separation

Has it ever dawned on you what would happen if your employers decide to terminate your job? While some job termination may not have severe consequences, most companies will use an employee separation agreement to ensure that the employee releases the firm from any binding claims. Once an employee signs the agreement, it means he or she cannot legally sue the employers for severance pay or wrongful termination. Leading to the bigger question: Should I sign an employment separation agreement?

A decision on whether to sign or not to sign an employee separation agreement will depend on several aspects. However, the first thing to do is to ensure that you understand what the agreement entails and the terms and condition that comes with it as outlined in this piece.

What is an Employee Separation Agreement?

An employee separation agreement can be defined as a document that sets out the termination terms between a company and a terminated employee. Signing the agreement, therefore, means you waiver your right of suing the company for wrongful termination.

BasicTerms of Separation Agreement

The termination agreement normally lists the circumstances that the parties have concurred to and the legality that bonds the contract. But it’s essential to examine the terms keenly since some conditions might supersede other agreements, including your service contract. Some of the common conditions to look out for include:

The Separation Details

Here, the agreement identifies both parties by stating the employment and the termination date. It also outlines the specific reason for leaving, including layoff, termination, or resignation.

Severance Package

This is optional, meaning it may or may not include the monetary payout. The law requires that employees receive their due wages up to the final working day and the accrued vacation. Even the most established companies lay off employees without severance pay. However, it is vital to refer to your work contract for the terms governing your severance packages.

Keep in mind the company wants you to sign the termination agreement to waiver your future claims. And this means you have to consider if the severance package being offered is worth your release. Having a clear understanding of the rules and policies covering your termination can help you in being entitled to even a better severance plan.

The Amount and Delivery Method

If the employer offers other disbursements and wages, the termination agreement has to shed light on the exact amount and nature of compensation. The compensation can be made through a structured plan or a lump sum. In whichever case, the agreement must stipulate the exact date and the delivery method.

Non-Compete Provision

A non-compete section restricts you from taking part in any job field within a particular timeline or within a specified location. It is also another mechanism that companies use in protecting their interests. In short, it prevents the employee from working for the rivalry, which means you must understand their implications and conditions before signing.

Insurance and Tax

The agreement must outline the tax abatements and the payment strategy. In some cases, the company might continue to pay for your health insurance plan. This can be the case, mainly if you belong to a health group insurance program.


Some employers will require that the termination agreement details remain private. A confidentiality termination agreement should, therefore, specify what remains private. It must also list the exemptions to the non-disclosure clause.


Here the company will state what the employee can or cannot say regarding the company, employment practices, and reasons for your termination.

Free Forms & Templates

Sample Employment Separation Agreement and Release Form

Employment Separation Agreement Form

Employment Separation Word Agreement

Standard Employment Separation Agreement Template

    Before Signing the Employment Separation Agreement

    Before signing the agreement, ensure you analyze the terms of the agreement and the labor laws within your state. Keep in mind that the company might consider its interest first. You, therefore, have to ensure you sign something that protects your rights by considering the following:

    • The claims you will be waiving up by signing the separation agreement.
    • The main reasons for the termination. Keep in mind that unlawful termination can warrant an alternative action.
    • Your age. Any person who is above 40 years will only have 21 days to think about the severance offer before it is terminated. After signing, you will have seven days to revoke the signed agreement.
    • Is the agreement a general release? Will it cover both the future and present actions, including the class action lawsuits, or it’s limited to your termination?

    Are there Rules that Cover the Separation Agreement?

    Each state usually has specific laws that govern the employee separation agreement. The federal regulations also touch on different aspects of the termination agreement. However, a poorly executed agreement can be declared unenforceable in a court.

    Due to the complexity of the legal framework involved in drafting and offering the agreement, it is important to involve the services of an experienced attorney. This will help in ensuring the agreement protects the interests of both parties.

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