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Employee Severance Package Agreement

Last revision Last revision 03/06/2024
Formats FormatsWord and PDF
Size Size6 to 9 pages
4.5 - 2 votes
Fill out the template

Last revisionLast revision: 03/06/2024

FormatsAvailable formats: Word and PDF

SizeSize: 6 to 9 pages

Rating: 4.5 - 2 votes

Fill out the template

An Employee Severance Package Agreement is a document used when an employee is being terminated from their position and the employer would like to provide them with benefits to support their transition away from the company. Typically, these types of benefits are offered to an employee who is being terminated due to reasons beyond their control, such as downsizing or restructuring.

The Severance Package Agreement covers key details such as the separation date, severance benefits, and mutual non-disparagement of the parties involved. Although information about severance benefits is sometimes included in an Employee Handbook or Employment Agreement, having a separate Severance Package Agreement allows the parties to go more in-depth and can be especially useful if the Employee Agreement does not address this issue.

By creating an Employee Severance Package Agreement, the employee can be assured that they will receive benefits that will help them land on their feet once they are separated from the company and moving on to alternative employment. The Employer can be secure in knowing that the employee will adhere to the obligations set out for them, such as returning property and maintaining confidentiality, and that their separation from work is a smooth and easy transition for both parties.

This document should be used by an employer who wants to create a contract with one specific policy. For employers who would like to create an internal policy to be applied more broadly to all eligible employees, a Severance Policy document should be used instead.

How to use this document

This document covers all the important information necessary for an employee and employer to settle the rights and obligations of the parties when the employee is being terminated from their job and will be receiving a severance package, including:

  • Pertinent identifying information for all involved parties;
  • Specifics of the severance benefits the employee receive including monetary benefits, such as a severance payment, accrued paid time off reimbursement, or commission payments, and non-monetary benefits, such as continued health insurance coverage or wellness benefits for a period of time;
  • Agreeing to a non-disparagement clause, also known as a mutual respect and professionalism clause, where the employee promises not to publicly speak negatively about their former employer or its operations; and
  • Adherence to confidentiality clauses to ensure that the employee does not disclose the employer's confidential information. This is a general clause, but if a more extensive Non-Disclosure Agreement (NDA) is desired, this can be completed as an additional document.

The employee and employer should discuss the terms of the Agreement and create and sign the final Agreement before the employee's final separation date from the company. After inputting all the required information, this Agreement should be printed out, signed by both parties, and kept on file by both parties for the duration of the Agreement as well as for a reasonable period of time thereafter.

Applicable law

This Employee Severance Package document is subject to several applicable federal laws, as well as assorted state and local laws. The Worker Adjustment and Retraining Notification (WARN) Act is a federal law that requires employers in specific industries to provide notice before any planned plant closures or mass layoffs. This is to ensure that employees have time to seek alternative employment or training opportunities.

The Fair Labor Standards Act (FLSA) may impact the payment of wages, bonuses, and other compensation components outlined in the severance package.

The Age Discrimination in Employment Act (ADEA) prohibits age discrimination against employees over the age of 40 and may impact severance benefits provided. Consideration of state and local employment laws is also crucial, as these may vary and add additional requirements to the severance process.

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