What Are the Most Requested Terms in Employee Separation Agreements?
ContractsCounsel, a platform for connecting you with vetted lawyers, has researched what terms employers and employees commonly want in their employee separation agreements.
Project data from the site has found these clauses include severance pay, confidentiality and non-disclosure clauses, non-compete and non-solicitation restrictions, release of claims, return of company property, continued benefits, and terms addressing equity or termination disputes. These terms ensure clarity and guard both parties’ interests.
Read on to learn more about them and why they’re essential.
Note: We’ve taken real, anonymized data from thousands of projects posted on the ContractsCounsel platform to see what clients most want included in their contracts.
1. Severance Pay
Our research has found that severance pay is a term most often requested and negotiated when drafting employee separation agreements. The agreed-on amount usually depends on how long the employee has worked for the company and their job role.
Takeaway: State the amount, payment schedule, and any conditions - like signing a release - before payment is made.
2. Confidentiality and Non-Disclosure Clauses
NDAs protect employers' sensitive business information and trade secrets, so they will want this in their contract. By comparison, employees usually want to know what they’re not allowed to say or do after leaving.
Takeaway: The agreement must clearly define what information stays confidential and for how long.
3. Non-Compete and Non-Solicitation Clauses
Clients in the finance, tech, and professional industries tend to want non-compete and non-solicitation clauses included in the contract. These limit how much an employee can solicit the employer’s clients or coworkers, usually for a set amount of time after leaving.
Takeaway: You should carefully read through the contract clauses to ensure that they are reasonable and have clearly defined duration and scope so that they are enforceable by law.
4. Release of Claims and Liability Waivers
Many agreements we’ve seen have a release of claims clause. This is when the employee gives up the right to sue the employer for anything that occurred before they left the working relationship.
Takeaway: Employees must know what rights they’re waiving, while employers must be sure that they’re following employment law.
5. Return of Company Property and Cooperation Clauses
Clients want their property returned, such as keys or laptops. This is important for them to specify in the agreement, so that they don’t lose property or have confidential documents exposed by leaving employees.
Takeaway: The contract should state the responsibilities of the employee when returning property, as well as how long they have in which to do so.
6. Continued Benefits and Transitional Support
Agreements don’t always end the working relationship entirely. Sometimes, they’ll include continued benefits for the employee, such as health insurance or help with moving into a new career.
Takeaway: Make sure you clearly state what extended benefits apply to the situation and for how long. Any costs that the employer or employee need to be accountable for should also be defined.
7. Equity, Bonuses, and Dispute-Specific Provisions
Employee separation agreements for executive and startup situations tend to include clauses related to stocks, termination disputes, and bonuses.
Takeaway: Review these clauses carefully to see what compensation or stock rights continue after the employee leaves the company.
Why This Matters
Separation agreements combine financial, legal, and confidentiality terms to protect both sides, as our project data has shown. For employees, such agreements protect their business; for employees, they ensure rightful compensation and treatment.
Get Help With Your Employee Separation Agreement
If you want your employee separation agreement written or looked at by a profession, head onto ContractsCounsel, where you can post your project for free. Get proposals from vetted employment lawyers who have the expertise to customize the contract to meet your needs.
