Create Your Severance Agreement

Draft a comprehensive severance agreement that protects your interests, ensures legal compliance, and clearly outlines separation terms. Built with guidance from employment law experts.

Severance Agreement Template

A severance agreement is a legally binding contract between an employer and departing employee that outlines the terms of employment separation, including compensation, benefits, and mutual obligations. This comprehensive template ensures compliance with current employment laws while protecting both parties' interests.

What This Template Is For

This severance agreement template helps organizations and employees formalize separation terms while minimizing legal risks. It's designed for situations involving voluntary departures, layoffs, or negotiated exits, providing clear documentation of severance pay, benefits continuation, and release of claims.

When To Use This Template

Use this template when:

  • Implementing a reduction in force or layoff
  • Negotiating an executive's departure
  • Offering early retirement packages
  • Documenting mutual separation agreements
  • Protecting against potential future claims

How To Customize It

Follow these steps to customize your severance agreement:

  1. Review and adjust severance pay calculations based on company policy and tenure
  2. Specify any continued benefits and their duration
  3. Detail any non-compete or confidentiality requirements
  4. Include state-specific legal requirements
  5. Ensure ADEA compliance for employees over 40
  6. Add any specific company policies or requirements

Common Use Cases

This template is commonly used for:

  • Corporate restructuring and downsizing
  • Executive transitions
  • Voluntary separation programs
  • Department eliminations
  • Individual terminations

Best Practices

Follow these guidelines:

  • Provide adequate consideration time (21 days for individual agreements, 45 for group layoffs)
  • Include clear language about rights and obligations
  • Specify all compensation and benefits clearly
  • Ensure compliance with state and federal laws
  • Document delivery and signing procedures

Template Variations

Consider these variations based on your needs:

  • Group termination agreements
  • Executive severance agreements
  • Reduction in force packages
  • Early retirement offers

Success Stories

Organizations have successfully used this template to:

  • Implement smooth department restructuring
  • Navigate executive transitions professionally
  • Execute compliant group layoffs
  • Resolve potential disputes amicably

Frequently Asked Questions

Is severance pay required by law?

No, severance pay is not legally required unless specified in an employment contract or company policy.

What should be included in a severance agreement?

Key elements include severance pay amount, benefits continuation, release of claims, confidentiality terms, and non-compete provisions if applicable.

How long do employees have to review a severance agreement?

Employees over 40 must receive 21 days for individual agreements or 45 days for group terminations, plus a 7-day revocation period.

Can an employee negotiate severance terms?

Yes, severance terms are typically negotiable, including pay amount, benefits continuation, and other conditions.

Are severance agreements legally binding?

Yes, when properly executed, severance agreements are legally binding contracts enforceable by both parties.