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Severance Contract

Severance Contract Template for England and Wales

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Key Requirements PROMPT example:

Severance Contract

"I need a Severance Contract for a senior IT manager leaving due to redundancy in March 2025, including a 6-month non-compete clause and continuation of health benefits for 3 months after termination."

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Document background
A Severance Contract is used when employment is being terminated by mutual agreement or as part of a settlement. This document, governed by England and Wales law, protects both parties by clearly defining termination terms, including financial arrangements, confidentiality obligations, and waivers of claims. It must comply with specific statutory requirements, including the provision of independent legal advice to the employee. The contract typically includes details of severance payments, treatment of benefits, post-termination restrictions, and reference provisions.
Suggested Sections

1. Parties: Identification of employer and employee

2. Background: Context of employment termination and basis for agreement

3. Definitions: Key terms used throughout the agreement

4. Termination Date: Specific date employment ends and final working day

5. Severance Payment: Details of payment amounts, timing, and tax treatment

6. Waiver of Claims: Employee's waiver of legal claims against employer

7. Confidentiality: Obligations regarding confidential information and agreement terms

8. Legal Advice: Confirmation of independent legal advice received

Optional Sections

1. Garden Leave: Terms of garden leave if applicable during notice period

2. Post-Termination Restrictions: Non-compete and other restrictive covenants to protect business interests

3. Reference: Terms of employment reference to be provided as part of settlement

4. Benefits Continuation: Details of any benefits extending beyond termination date

5. Company Property: Requirements for return of company property and assets

Suggested Schedules

1. Schedule 1 - Claims: Detailed list of statutory and contractual claims being waived

2. Schedule 2 - Payment Calculation: Breakdown of severance payment components

3. Appendix 1 - Adviser's Certificate: Legal adviser's confirmation of advice given

4. Appendix 2 - Agreed Reference: Form of reference to be provided to future employers

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓƵ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
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Industries

Employment Rights Act 1996: Primary legislation governing statutory notice periods, unfair dismissal provisions, and redundancy payment calculations

Equality Act 2010: Ensures protection against discrimination and requires severance terms to be non-discriminatory

Income Tax (Earnings and Pensions) Act 2003: Governs tax treatment of severance payments, including the £30,000 tax-free threshold for termination payments

National Insurance Contributions Act 1992: Addresses National Insurance Contribution implications of severance payments

ACAS Code of Practice: Provides guidance on proper procedures and requirements for settlement agreements

Data Protection Act 2018 and UK GDPR: Regulates handling of personal data and privacy considerations in severance agreements

Settlement Agreement Requirements: Covers independent legal advice requirement, adviser's certificate, and clear waiver of specific claims

Contractual Elements: Includes notice periods, garden leave provisions, post-termination restrictions, and confidentiality obligations

Financial Considerations: Encompasses payment calculations, tax treatment, payment timing, and benefits continuation/termination

Statutory Compliance Requirements: Covers statement of particulars, right to appeal, and collective consultation requirements where applicable

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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