Employment Separation Agreements: Key Elements for the Employee
Summary of the essential elements of a severance agreement or employment separation agreement from the employee's perspective.
-
Separation Pay
The separation, severance, or settlement payment is the number one item and should be clearly and specifically stated in the separation agreement. -
Non-disparagement Clause
A clause prohibiting the employer from making any verbal or written statements that disparage the employee. -
Neutral Reference Clause
A clause that provides that the employer will only release dates of employment and positions held to prospective employers of the employee. -
Positive Reference Letter
A pre-written, pre-signed positive reference letter attached to the separation agreement. -
Covenant to Not Contest Unemployment
A covenant that the employer will not oppose the employee's claim for unemployment insurance benefits. -
Mutual Release
A release and waiver of all claims in which the employer also releases the employee. -
Mutual Covenant Not to Sue
A covenant to not file any claims or lawsuits in which the employer also agrees to not sue the employee. -
Payment of All Amounts Due
All items due, such as vacation pay, expense reimbursement, bonuses, and any other outstanding compensation or moneys due should be included in the separation agreement. -
No Additional Restrictive Covenants
New restrictive covenants such as non-competition clauses should not be agreed to in a separation agreement since the employment relationship has already been terminated. -
No Attorneys' Fees Clauses
Clauses which would require the employee to pay the employer's attorneys' fees in the event of litigation should not be agreed to because they create the potential for a catastrophic result.
