Employee Severance and Release Agreement
An Employee Severance and Release Agreement represents compensation received after the termination of the employment contract.
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What Is a Employee Severance and Release Agreement?
If a layoffs rumor circulates through a company, some employees may want to quit to get ahead to look for a new job. But that's not always the best decision.
Even if termination of employment is nearly guaranteed, staying on might be beneficial because of the potential severance package.
The Employee Severance and Release Agreement outlines all the financial terms regarding the employee's departure from the company.
What Is an Employee Severance and Release Agreement?
The most important aspect of the Employee Severance and Release Agreement is the monetary arrangement.
However, this financial cushion is the only element the soon-to-be former employee can negotiate with their employer.
This type of agreement can contain the promise of references, insurance, paid time off, and other perks. There are no clear rules on creating Severance Agreements, but they often offer one or two paid weeks for every year the employee has worked in the company.
The Severance Agreements helps terminated employees to receive temporary financial assistance from the government.
Other Names for Employee Severance and Release Agreement
Depending on your state, and Employee Severance and Release Agreement may also be known as:
- Severance Package
- Severance Pay for Fired Employees
- Severance and General Release Agreement
- Compensation Package
Who Needs an Employee Severance and Release Agreement?
The employer offers the Employee Severance and Release Agreement upon termination of the employment contract.
These agreements are typical when a company eliminates an entire department or position or when the business goes through restructuring.
Another common situation when you offer severance packages is during massive layoffs when the company is struggling.
The Employee Severance and Release Agreements are also helpful to employers as it protects them from specific claims against them.
Why Use Swyft Forms for Your Employee Severance and Release Agreement?
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Create your own documents by answering our easy-to-understand questionnaires to get exactly what you need out of your Employee Severance and Release Agreement.
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Laws vary by location. Each document on Swyft Forms is customized for your state.
How to Create an Employee Severance and Release Agreement With Swyft Forms
The Employee Severance and Release Agreement can be a complex contract. Both parties negotiate the terms to get the most out of it. The Severance and Release Agreement can have as many provisions as both parties find suitable.
Let Swyft Forms help with our extensive library of attorney-vetted legal forms. The process is fast and easy. All you have to do is fill out our easy-to-understand questionnaire. Once complete, simply download your form as a PDF or Word document from your secure online account.
What Information Will I Need to Create My Employee Severance and Release Agreement?
To create your document, please provide:
- Employer's Details: The legal name and the address of the employer or a business
- Employee's Details: Full legal name and contact information of the employee
- Governing Law: Inclusion of the language regarding what state's jurisdiction law to use in the agreement
- Date of Hiring: Exactly when the employee hired for the position
- Date of Termination: The exact date of the termination of the employment contract
- Deadline: When the severance package offer expires
- Liability waivers: A complete list of waivers that the employee will release in the agreement
- Severance Payment: The severance pay amount
- Benefits: Any additional parts of the contract such as insurance, PTO, stocks, references, etc.
Employee Severance and Release Agreement Terms
- Severance: An act of ending, separating; employment separation
- PTO: Paid Time Off; Planned Time Off; Personal Time Off
- Liability Waiver: A type of clause that acknowledges that the employee won't sue the company
- FMLA: Family and Medical Leave Act
- Governing Law: A clause specifying the chosen jurisdiction that the company will use in case of dispute
Employee Severance and Release Agreement Signing Requirements
If the employer offers a severance package to the employee, they usually don't have to sign it right away. They can take the time to review the agreement and see if it is to their satisfaction.
During the same period, the employer can change the terms of the agreement as well. If both parties are satisfied, they sign the document in the presence of a witness.
What to Do With Your Employee Severance and Release Agreement?
Both parties should keep a copy of the Employee Severance and Release Agreement. The employer can store it in the company's HR department, and the employer should also keep it safe. There is no need to notarize the agreement for it to be legally binding.
Other Names for Employee Severance and Release Agreement
- Employee Severance and Release Agreement Form
- Employee Severance and Release Agreement Document
- Employee Severance and Release Agreement Agreement
- Employee Severance and Release Agreement Contract
- Employee Severance and Release Agreement Template
- Employee Severance and Release Agreement Checklist
Who Needs a Employee Severance and Release Agreement?
Why Use Swyft Forms for Your Employee Severance and Release Agreement
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Frequently Asked Questions
Many employers offer Severance and Release Agreements to ensure they're not sued after the termination. That's why the agreement typically covers class action claims, disability claims, common law claims, and statutory claims.
But there are types of claims that employers cannot release, such as worker's compensation claims, Age Discrimination in Employment Act claims, minimum wage and overtime claims, and unemployment insurance claims.
Generally speaking, they are not legally required to offer severance packages to their employees. In some states, if the employer is closing the facility and laying off a significant number of employees, they need to offer a small severance.
The only other situation where the employer would have to pay the severance is if the workers believed they would.
Other than that, employers are not obligated to offer severance. However, offering severance is considered a practice of fostering goodwill among employees.
Yes, in most cases, you can negotiate your Employee Severance and Release Agreement with the employer. They can't make you sign the contract if you don't want to – it's only an option.
Usually, if the employer is offering a Severance Agreement, it's in their best interest for you to sign it as well. You can negotiate the severance payment, benefits, PTO, non-compete, and non-disparagement clauses, and a lot more.
For the terminated employee, a Severance Agreement provides a temporary safety net. They can proceed to search for new employment with a little less stress. It can also assure that their family continues to have health and insurance benefits during a period.
For the employer, a severance package is a gesture of good faith towards the employee that might have lost their job through no fault of their own. It can also protect the employer from any potential claims or lawsuits by the terminated employees.
Many employers and companies have a template Employee Severance and Release Agreement they use for the termination process.
However, the employee may take some time to review the offered severance package. It can be a good idea to ask for legal advice to ensure the agreement is fair.
On the other hand, if the terms of the agreements are clear and the relationship between two parties is amicable, legal assistance might not be necessary.