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A Severance Agreement is a legally binding contract between an employer and a departing employee that outlines the final terms of their separation. Under Singapore's Employment Act, it typically covers the compensation package, benefits, and specific obligations both parties must follow after the employment ends.

Beyond the mandatory notice period and basic salary requirements, these agreements often include confidentiality clauses, non-compete restrictions, and provisions for unused leave payments. They protect both employer and employee interests by clearly stating each party's rights and responsibilities, helping prevent future disputes and ensuring a smooth transition for everyone involved.

Use a Severance Agreement when ending employment relationships, especially during restructuring, leadership changes, or voluntary departures in Singapore. These agreements become essential for senior executives, employees with access to confidential information, or situations involving potential disputes about termination terms.

Many organizations implement Severance Agreements during mergers and acquisitions, company relocations, or when offering early retirement packages. They're particularly valuable when you need to protect trade secrets, maintain confidentiality, or ensure a clean break while complying with Singapore's Employment Act requirements. The agreement helps prevent future legal complications by clearly documenting the separation terms.

• Severance Negotiation Letter: Initial document proposing terms and opening discussions about separation benefits
• Severance Package Letter: Formal outline of the complete compensation and benefits offering
• Employee Severance Letter: Simplified version for standard departures with straightforward terms
• Voluntary Severance Agreement: Specialized agreement for mutually agreed departures, often with enhanced benefits

• Employers/Companies: Initiate and draft agreements through their HR or legal departments, ensuring compliance with Singapore employment laws
• Departing Employees: Review, negotiate, and sign agreements, particularly senior executives or those with access to sensitive information
• HR Directors: Manage the severance process, coordinate with legal teams, and ensure fair implementation of terms
• Employment Lawyers: Review and refine agreement terms, advise both parties on rights and obligations
• MOM Officials: May review agreements in dispute cases to ensure compliance with Employment Act provisions

• Employment Details: Gather accurate employment dates, current salary, position, and benefits information
• Separation Terms: Calculate severance pay, notice period requirements, and any additional benefits under Singapore law
• Company Assets: List all company property to be returned, including devices, documents, and access credentials
• Confidentiality Scope: Define specific trade secrets and proprietary information to protect
• Legal Requirements: Review MOM guidelines and Employment Act provisions for minimum severance terms
• Document Generation: Use our platform to create a legally compliant agreement that includes all mandatory elements

• Identification Section: Full names and details of employer, employee, and effective termination date
• Compensation Terms: Clear breakdown of severance pay, benefits, and payment schedule
• Release Clause: Mutual release of claims and legal rights under Singapore employment laws
• Confidentiality Terms: Specific obligations regarding company information and trade secrets
• Return of Property: Detailed list of company assets to be returned
• Non-Compete/Non-Solicit: Reasonable restrictions as per Singapore contract law
• Governing Law: Express statement that Singapore law governs the agreement
• Signature Block: Space for both parties to sign, date, and acknowledge terms

A Severance Agreement differs significantly from an Business Acquisition Agreement in both purpose and scope, though both can arise during corporate transitions. While Severance Agreements focus on individual employment termination terms, Business Acquisition Agreements cover the broader transfer of business ownership and assets.

• Parties Involved: Severance Agreements are between employer and employee, while Business Acquisition Agreements involve buyers and sellers of businesses
• Scope of Coverage: Severance focuses on termination benefits and post-employment obligations, while acquisition agreements address business assets, liabilities, and operational transfer
• Timing and Duration: Severance agreements typically have immediate effect with specific post-employment periods, whereas acquisition agreements often involve longer transition periods and ongoing obligations
• Legal Framework: Severance falls under Singapore's Employment Act provisions, while acquisitions involve corporate law and regulatory requirements