How to Craft a Severance Agreement (Template Included)

Prepared for: [Employee Name], [Employee Company]
Prepared by: [Employer Name], [Employer Company]

This severance agreement (“Agreement” or “Severance Agreement”), is entered into and made effective as of [Date] (“Effective Date”), by and between [Employee Name] (“Employee”) and [Employer Name] (“Employer”).

WHEREAS, Employee was employed by Employer under an agreement of employment from a period of [Date] to [Date]; and

WHEREAS, Employer and Employee hereby agree to terminate their employer-employee relationship effective as of [Date] (“Severance Date”); and

WHEREAS, both Employer and Employee desire to settle any actual or potential differences and disputes of their employment relationship or its termination;

NOW, THEREFORE, in consideration of the foregoing, and the of the mutual covenants, commitments, and agreements contained therein, the receipt and sufficiency of which is hereby acknowledged, both parties voluntarily agree to the following terms:

1. Effective as of the Severance Date, Employee’s employment by Employer shall be terminated.

2. Employer is under no obligation to pay any sum or provide any benefit as a result of such termination, and Employee’s payment of the severance benefits as described in this Section 2 below will only be made by Employer following Employee’s execution of this Agreement.

Employer agrees to pay Employee a severance benefit in the amount of [$ Amount] in consideration of the promises and covenants made in this Agreement.

3. In accordance with Employer’s policies, Employee will continue to receive insurance coverage from Employer under Employer’s health, vision, and dental benefits plans, provided Employee subscribes to such plans, until [Date].

4. Employer is under no obligation to pay, and Employee understands that Employee is not entitled to, any compensation other than what is expressly stated in Section 2 of this Agreement.

5. Employee agrees not to disparage Employer, nor its subsidiaries, affiliates, officers, directors, stakeholders, employees, agents, products, or services in any way, whether verbally or in written form, publicly or non-publicly, to any third parties, to include any Employer employees.

6. Employee hereby voluntarily, completely, unconditionally, and irrevocably discharges and fully releases Employer, and its subsidiaries, affiliates, officers, directors, stakeholders, employees, agents, predecessors, associates, and their trustees (“Released Parties”), from and against any and all liabilities, claims, demands, suits, proceedings, or charges, whether known or unknown at the time of this Agreement, and whether related to any claimed non-compliance by Employer with any applicable law or regulation, to the extent that such claims are in any way connected to or arise out of Employer’s employment of Employee or the termination of such employment.

7. For a period lasting [Number] years after the Severance Date, Employee agrees not to directly or indirectly engage in any act to persuade, influence, induce or otherwise attempt to induce, any other employee of Employer to terminate their own employment with Employer, or to otherwise accept employment elsewhere.

8. For a period last [Number] years after the Severance Date, Employee agrees not to directly or indirectly engage in any aspects of business that would be considered similar in nature to the business of Employer, its subsidiaries, and any current or former clients and/or customers, without the written consent of Employer. Nor shall the Employee solicit any client, customer, officer, staff, or employee for the benefit of Employee or a third party that is or may be engaged in a similar business.

9. On or prior to the Severance Date, Employee will return to Employer all tangible confidential or proprietary information, or other company property in Employee’s possession or control. Furthermore, Employee represents and warrants to Employer that Employee will uphold the terms and conditions of the Non-Disclosure Agreement between Employee and Employer and will not disclose to third parties any confidential or proprietary information acquired during Employee’s employment by Employer.

10. Employee agrees that nothing in this Agreement constitutes an admission of any wrongdoing or breach by Employer of any agreement, law, or regulation, or any willful or negligent misconduct of any kind.

11. Employer makes no further agreements, warranties, or representations of any kind related to Employee’s severance beyond what is expressly stated herein, and Employee acknowledges and agrees to the same.

12. Employee acknowledges that, notwithstanding the acceptance of this Agreement, they retain the right to contest their termination if they believe it to be unlawful or in violation of their contractual or statutory rights. Employee may file a claim with the appropriate federal, state, or local agency, or seek legal redress through the courts. This Agreement does not waive any rights Employee may have under applicable labor laws, anti-discrimination statutes, or other relevant regulations. Employer agrees to provide necessary information or documentation requested by Employee or relevant authorities in connection with any such claim. Both parties are encouraged to seek legal counsel to understand their rights and obligations fully.

13. Both Employer and Employee acknowledge and agree that if any provision of this Agreement is determined to be invalid or unenforceable, the remaining Agreement will remain in force.

14. This Severance Agreement shall be governed by and interpreted according to the laws of [State/Jurisdiction]. Any disputes arising hereunder shall also be subject to the laws of [State/Jurisdiction].

IN WITNESS WHEREOF, the parties hereto have caused this Severance Agreement to be executed and effective by affixing their signatures below.

Employee Name (Printed): ________________________

Employee Company: ____________________________

Employee Signature: ____________________________

Date: ________________

Employer Name (Printed): ________________________

Employer Company: ____________________________

Employer Signature: ____________________________

Date: ________________