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A Severance Agreement is a legal contract between an employer and a departing employee that spells out the final terms of their separation. It typically offers the employee extra pay or benefits beyond their last paycheck in exchange for specific promises - most commonly, agreeing not to sue the company or share confidential information.

The agreement protects both sides during job transitions: employers gain legal certainty and a clean break, while employees receive additional compensation to help bridge their gap between jobs. Most U.S. companies require these agreements for layoffs and some resignations, though federal laws like ADEA set strict rules about how they must be written and presented to workers over 40.

Consider using a Severance Agreement when ending an employment relationship, especially during layoffs, restructuring, or when senior executives depart. These agreements are particularly valuable when dealing with employees who had access to trade secrets, managed key client relationships, or might have potential legal claims against your company.

The timing matters - present the Severance Agreement before the employee's last day but after announcing the separation. This gives both parties time to review terms and negotiate if needed. For workers over 40, federal law requires at least 21 days to consider the agreement and 7 days to revoke after signing, making early preparation essential.

• Employee Severance Agreement: The standard comprehensive version covering all key terms like payment, benefits, and legal releases - typically used for most employee separations.
• Voluntary Redundancy Settlement Agreement: Specifically designed for mutually agreed departures, often with enhanced benefits to encourage voluntary exits.
• Severance Letter: A simplified format that outlines basic terms - useful for routine departures or smaller organizations.
• Non Disparagement Employment Agreement: Focuses heavily on protecting company reputation, often used with high-profile departures or sensitive situations.

• Employers/Companies: Draft and offer the Severance Agreement, typically through HR or legal departments, to protect company interests and ensure clean separations.
• Departing Employees: Review, negotiate, and sign the agreement in exchange for additional compensation or benefits beyond standard final pay.
• Employment Attorneys: Review agreements for both sides, ensure compliance with state and federal laws, and negotiate terms.
• HR Professionals: Manage the process, coordinate with legal teams, and ensure proper documentation and timing requirements.
• Corporate Legal Teams: Create agreement templates, customize terms for specific situations, and handle complex negotiations.

• Employee Details: Gather full name, position, hire date, termination date, and current compensation package including benefits.
• Severance Terms: Calculate total severance pay, continuation of benefits, and any additional perks like outplacement services.
• Legal Requirements: Check age-related rules (ADEA compliance for 40+ workers), state-specific requirements, and any industry regulations.
• Company Assets: List all items for return including devices, keys, documents, and timeline for return.
• Confidentiality Scope: Define what information must remain confidential and for how long.
• Review Process: Our platform generates legally-sound agreements customized to your needs, ensuring all essential elements are included.

• Consideration Statement: Clear details of severance pay, benefits, and any additional compensation being offered.
• Release of Claims: Comprehensive list of legal claims the employee waives by accepting the agreement.
• Non-Disparagement: Terms preventing both parties from making negative statements about each other.
• Confidentiality: Specific provisions about maintaining company secrets and sensitive information.
• Return of Property: Requirements for returning company assets and documents.
• ADEA Compliance: For employees over 40, specific language required by federal law including 21-day review period.
• Revocation Period: Clear statement of the 7-day revocation right for age-protected workers.
• Governing Law: State law that governs the agreement's interpretation and enforcement.

A Severance Agreement differs significantly from an Arbitration Agreement, though both deal with employment disputes. Let's explore their key differences:

• Timing and Purpose: Severance Agreements are used at employment end to finalize separation terms, while Arbitration Agreements are signed at hiring to establish dispute resolution methods.
• Scope of Coverage: Severance Agreements handle specific termination benefits and releases, while Arbitration Agreements cover all potential future disputes throughout employment.
• Compensation Element: Severance Agreements include additional payment or benefits as consideration, while Arbitration Agreements typically don't involve direct compensation.
• Legal Focus: Severance Agreements primarily address claims release and transition terms, while Arbitration Agreements focus on establishing an alternative to court litigation.
• Revocation Rights: Severance Agreements often include mandatory revocation periods (especially for older workers), while Arbitration Agreements typically don't allow revocation once signed.