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Sample Severance Agreement and General Release

Sample Severance Agreement and General Release: A Comprehensive Guide for Employers and Employees

When an employment relationship comes to an end, the employer and employee often enter into a severance agreement and general release to settle any potential disputes between them. Severance agreements are legal contracts that outline the terms and conditions of the employee`s departure from the company. A general release, on the other hand, is a legal document that waives the employee`s right to sue the employer for any claims arising from the employment relationship.

If you are an employer or employee considering a severance agreement and general release, it is important to understand the key provisions of these documents. In this article, we will discuss the basics of severance agreements and general releases, including what they typically cover, their legal requirements, and how they can benefit both employers and employees.

What is a Severance Agreement?

A severance agreement is a legal contract between an employer and employee that sets forth the terms and conditions of the employee`s departure from the company. Such agreements often arise in cases of layoffs, early retirement, or termination without cause. A severance agreement usually includes the following provisions:

1. Severance Pay: The agreement should specify the amount of severance pay the employee will receive upon departure. This can be a lump sum payment or a series of payments over time. The amount of severance pay depends on several factors, such as the employee`s length of service, position, and salary.

2. Benefits: The agreement should address the continuation of benefits, such as health insurance, retirement plans, and other employee benefits. It should also specify the duration of such benefits.

3. Confidentiality and Non-Disclosure: The agreement should include a confidentiality and non-disclosure provision that prohibits the employee from disclosing any confidential or proprietary information of the company.

4. Non-Competition and Non-Solicitation: The agreement should also address restrictions on the employee`s ability to compete against the company or solicit its customers or employees.

5. Release of Claims: The agreement should include a release of claims provision that waives the employee`s right to sue the company for any claims arising from the employment relationship.

What is a General Release?

A general release is a legal document that waives the employee`s right to sue the employer for any claims arising from the employment relationship. The purpose of a general release is to settle any potential disputes between the employer and employee, and to provide finality to the employment relationship. A general release usually includes the following provisions:

1. Claims Released: The release should specify the claims that the employee is releasing, including claims for discrimination, harassment, retaliation, and wrongful termination.

2. Consideration: The release should specify the consideration that the employee is receiving in exchange for signing the release, such as severance pay or other benefits.

3. Time Period to Consider: The release should provide the employee with a period of time to consider the release before signing it. This is usually between 21 and 45 days.

4. Revocation Period: The release should provide the employee with a period of time in which to revoke the release after signing it. This is usually between 7 and 14 days.

5. Legal Advice: The release should advise the employee to consult with an attorney before signing the release.

Legal Requirements for Severance Agreements and General Releases

Severance agreements and general releases are legally binding contracts that must comply with certain legal requirements to be enforceable. These requirements vary depending on the state in which the agreement is executed, but generally include:

1. Consideration: The agreement must provide the employee with some form of consideration, such as severance pay or other benefits, in exchange for signing the agreement.

2. Voluntariness: The employee must sign the agreement voluntarily and without coercion or undue influence.

3. Knowingly and Willingly: The employee must sign the agreement knowingly and willingly, and must not be under duress or mental incapacity.

4. Legal Advice: The agreement should advise the employee to consult with an attorney before signing the agreement.

Benefits of Severance Agreements and General Releases

Severance agreements and general releases can benefit both employers and employees in several ways:

1. Certainty: A severance agreement and general release can provide both parties with certainty and finality in the employment relationship.

2. Protection: A general release can protect employers from lawsuits or claims arising from the employment relationship.

3. Compensation: A severance agreement can provide employees with compensation for their departure from the company.

4. Benefits: A severance agreement can provide employees with continuation of benefits for a certain period of time.

Conclusion

Severance agreements and general releases are important legal documents that can provide certainty and protection for both employers and employees when an employment relationship comes to an end. If you are an employer or employee considering a severance agreement or general release, it is important to understand the key provisions of these documents and the legal requirements for their enforcement. Consulting with an experienced attorney can help ensure that your agreement is legally sound and provides the best possible outcome for both parties.