Severance Agreement

What is a Severance Agreement?

A Severance Agreement is a legal contract between an employer and an employee that outlines the terms and conditions of a job termination. It often includes the details of severance pay or a 'severance package', an arrangement providing employees with certain benefits upon their dismissal from the company. The severance meaning, in this context, refers to the compensation that companies provide to employees upon termination that is not mandated by law.

When You'll Need This Document

Typically, employers use Severance Agreements when they terminate an employee, especially during layoffs or company downsizing. Employees might also need this document if they resign in certain circumstances or are part of a mutual agreement to terminate the employment relationship.

Who Benefits from This Form?

Both employers and employees can benefit from a Severance Agreement. For employers, it provides a way to limit potential legal liabilities and protect the company's reputation. For employees, it ensures financial security and assures fair treatment during the transition period after employment termination.

Legal Protection Offered by a Severance Agreement

One of the key legal benefits of a Severance Agreement is that it clarifies the terms of separation and can help prevent misunderstanding and potential legal disputes. It also provides protection for both parties by outlining the rights and obligations of each. The agreement can include non-disclosure or non-compete clauses, which protect the company's sensitive information and business interests.

Pros & Cons

Common Uses