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.

1. Separation Pay

   The separation, severance, or settlement payment is the number one item and should be clearly and specifically stated in the separation agreement.

2. Non-disparagement Clause

   A clause prohibiting the employer from making any verbal or written statements that disparage the employee.

3. 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.

4. Positive Reference Letter

   A pre-written, pre-signed positive reference letter attached to the separation agreement.

5. Covenant to Not Contest Unemployment

   A covenant that the employer will not oppose the employee's claim for unemployment insurance benefits.

6. Mutual Release

   A release and waiver of all claims in which the employer also releases the employee.

7. 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.

8. 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.

9. 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.

10. 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.