What is Employee Separation Agreement Drafting?
An employee separation agreement is a legal contract between an employer and employee that outlines specific things that must happen when an employee leaves the company.
When drafting this agreement, it’s essential to include key terms for clarity and enforceability to protect your interests.
Read the rest of this article to explore what key terms should be included in an employee separation agreement, how you should draft it, and why hiring a lawyer to provide a legal draft of the contract is advisable.
What Key Terms Should You Include in an Employee Separation Agreement?
Here are some common elements to include in an employee separation agreement so that both parties understand their roles and rights.
- Severance pay. This section specifies how much money the employee will receive upon leaving the company. The severance package usually depends on factors such as the employee’s years at the company and job role.
- Confidentiality. The contract should specify what company information must remain confidential. This could include inserting a non-disclosure agreement clause in the document.
- Non-compete and non-solicitation. These clauses restrict the employee from competing with the company, such as by soliciting its clients or other employees. It needs to have a specific duration to be reasonable.
- Release of claims. It’s common for employee separation agreements to include a release of claims clause so that the employee surrenders the right to pursue legal action against the employer.
- Termination. This specifies the exact date when the employment relationship ends.
- Return of property. The agreement should detail what items the employee must return to the company when their employment ends, such as keys, laptops, and others.
- Benefits. This explains what will happen to the employee’s benefits, which can include medical aid and pension funds, upon their departure from the company.
What are Tips for Drafting an Employee Separation Agreement?
When drafting an employee separation agreement, there are some important things to consider.
Detail Severance Payments
Your employee separation agreement should explain how and when severance payments will be made to the employee, such as if payments take the form of a lump sum or installments.
Make it Reasonable
An employee separation agreement must be reasonable to both parties so that its terms are legally enforceable. For example, if you’re including non-compete clauses, they should not have broad restrictions that are impractical and could hamper the employee’s career opportunities.
Include a No-Rehire Clause
In some cases, an employer might want to include a no-rehire clause that prevents the employee from applying for a future position at the company. This will protect the company from possible employee claims or retaliation.
State That This is the Final Agreement
You might want to include a clause that specifies the agreement is complete and final. It prevents future disputes about there being a separate written or verbal agreement that could amend or nullify the employee separation agreement.
Consider Your State Laws
Since employment laws vary in different states, you should be informed about your state’s requirements. If you don’t consider the laws, some legal provisions in your contract could be deemed illegal or unenforceable in court.
Negotiate the Agreement Terms
Before signing the agreement, both parties should discuss and negotiate it. This will ensure that the contract is favorable to both of them while being reasonable. Negotiating prior to signing gives you the chance to make adjustments to the contract in an easier way than trying to change it later on.
How Does a Lawyer Draft an Employee Separation Agreement?
Since employee separation agreements must be clear and detailed, as well as legally valid, you shouldn’t rely on a generic template or draft it yourself if you don’t have experience.
You should hire a qualified lawyer to assist you. A lawyer can help you in various ways, such as the following:
- Writing clear terms that are easy to understand but legally enforceable.
- Using their in-depth legal knowledge to ensure the agreement complies with all relevant laws.
- Defining the reason for the employee separation, while specifying both parties’ rights and roles.
- Reducing the risk of disputes, such as by writing fair and reasonable compensation provisions.
- Reviewing the agreement if you’ve already drafted it so that they can identify red flags, such as unreasonable non-competes or one-sided clauses.
Where to Find a Lawyer for Employee Separation Agreement Drafting
If you need to hire a qualified lawyer, you might struggle to find a reputable one in your location. On online legal marketplaces, finding a lawyer is easy and convenient, and you can do it from the comfort of your home.
ContractsCounsel is one of the largest online legal marketplaces that gives you access to a network of vetted lawyers. Since all lawyers on the platform have years of experience in contract drafting and review, they’ll be able to help you draft a clear and legally sound employee separation agreement.
Here are the steps to follow if you want to ask a lawyer on the platform to draft your employee separation agreement:
- Go to the ContractsCounsel marketplace.
- Post your project for free. Include a few details to help you find the most suitable lawyer, such as the industry in which you work and the reason for the separation.
- Wait for lawyer bids. Receive multiple bids from lawyers directly on the platform who have the experience to help you.
- Review the lawyers’ profiles. Take some time to go through the platform’s lawyer data, such as their location, client ratings for previous projects, years of experience, expertise, and credentials.
- Connect with a lawyer and hire them to draft your employee separation agreement for a flat fee.
