Employment Separation Agreement Template


An employment agreement separation template acts as a protection for companies when it comes to terminating an employee. The ‘protection’ term is used for the litigations that might happen in the future. It creates a legal understanding between terminated workers and the employer.

Many legal professionals suggest developing an employment separation agreement for better safety in workplace terminations. The organizations that did not consider the common practice of such agreements face legal action while terminating an employee. At the same time, a carefully written separation agreement will keep the organization safe from later termination lawsuits.

What is an Employment Separation Agreement?

An employee separation template is basically a separation agreement between the employer and the employee. This agreement sets out some terms and conditions which shows the legal perception between both parties. This agreement has some claims against the organization in response to some decided money. This money is considered a settlement or separation payment.

The terms and conditions from both parties in a separation agreement are:

  • Employment Separation Contract from Employer’s Outlook: Some of the key provisions of an employment separation agreement from an employer's outlook includes:
    1. Clear rejection or release by the worker of all perceptions against the employer.
    2. Withdrawal of remaining claims or lawsuits against the employer by the worker.
    3. Condition of not to bring claims or perceptions against the employer.
    4. Confidentially of the terms in the separation agreement.
    5. Statement about the confidentiality of the organization's information.
    6. The employee cannot make harmful statements against the organization.
    7. Workers cannot seek reemployment with the employer.
  • Employment Separation Contract from Employee’s Outlook: Some of the key provisions of an employment separation agreement from an employee's outlook includes:
    1. Complete payment of settlement or separation amount.
    2. Due payments of benefits and compensations.
    3. The employee cannot make harmful statements about the employer.
    4. The employee cannot oppose claims for insurance benefits.
    5. Issue all claims about an employee by the employer.
    6. The employee cannot bring perceptions or claims against the employer.
    7. Attach pre-signed reference letter with the agreement about the employer's stationery.

What is Employment Separation Agreement Used For?

Regardless of the basic importance of an employment separation agreement form, it creates understanding between both parties. This legal understanding protects both parties from any legal actions in the future. Talking about other terms and conditions which makes it a valid agreement for better use in inconvenient conditions, they are:

  • Information about Separation: The agreement includes a valid reason for leaving, like termination or resignation from the company. The date of termination is also mentioned in the separation agreement.
  • A Settlement Package: It is not necessary to mention separation or settlement money while terminating an employee. It completely depends upon the agreed terms or the condition of the organization at the time of termination. Organizations can either give the settlement money or just pay compensations and benefits and allow termination.
  • Payments and Method of Delivery: The compensation amount should be the exact amount offered by the company in the separation agreement. The payout can either be in a certain structured plan or a single payment. The date and delivery method are clearly mentioned in the agreement.
  • Insurance and Tax: The payment policy and the deduction of taxes should be outlined in the separation agreement. In certain conditions, the organization will continuously pay into the health insurance plan of an employee. This could happen when the worker is in the group health organization program.
  • Confidentiality: All details about the company and the separation agreement terms should remain confidential. The agreement will specify the list of terms that can’t be revealed in any case.

Types of Employment Separation Agreement:

The prominent process of separation in organizations is done in different situations for different employees. Commonly, employees and employers agree on a termination date when the employee is no longer required for the organization. Sometimes separation becomes a traumatic event regardless of the type of separation. Some types of employee separation agreement include:

  1. Retirement: Retirement is the major reason for separation between both parties. It is a termination of services of the worker on a decided age by the organization.
  2. Compulsory Retirement: This type of retirement is the termination of an employee from the services due to attaining his retirement age.
  3. Voluntary Retirement: There is a voluntary retirement option for every employee in the organization. This option allows employees to leave the organization before attaining their retirement age.
  4. Resignation: In this type of retirement, the employee first serves the notice to the employer regarding the end of his duties. This resignation is considered an involuntary action of the employer. Considering that compulsory action, the worker should face the employer to resign on the grounds of duty.
  5. Layoff: This form of retirement occurs when organizations confront some issues and, in response, fire some staff. The inconvenience might be the shortage of power, breakdown of some machinery, etc. Considering the laws mentioned in the agreement, the laid-off employees have the privilege of the compensation amount. However, to be entitled to the compensation amount, the employee should fulfill some conditions:
    • The employee is not a casual worker.
    • The name of the employee should be apparent in the conference's role of the establishment.
    • The employee should have done at least one year of service.
  6. Retrenchment: Retrenchment is the lasting termination of an employee because of some economic issues. The reasons for retrenchment are hard up demands for products or on account of the excess of staff. It usually occurs in agricultural services, machinery textiles, plantation, and cotton textiles, etc.
  7. Dismissal: Dismissal is the termination of an employee occurs due to misconduct or unsatisfactory results. Because of a consistent lack of success or failure in fulfilling the expectations of the employer, the employee ends up dismissed from the organization.

How Does Employment Separation Agreement Work?

An employee separation agreement template works according to the terms and conditions described in the contract. The non-acceptance of the terms from any side could cause legal actions against the other side. Both parties are required to go through the agreement before signing it to avoid inconveniences in the future. The company will first cover its interests in the agreement.

It is mandatory to look deeper into every detail of the agreement before finalizing it. A valid separation agreement should protect employee's rights such as:

  1. All those perceptions on which an employee gives up.
  2. Proper reasons for termination. It includes the types of a separation agreement with valid reasons.
  3. Consider the age of the employee for reconsidering signing the agreement.
  4. The agreement should cover all present and future acts like lawsuits.


By concluding the importance and working of the employee exit agreement, we recommend you an online platform CocoDoc. It is a platform that provides you different templates of types of termination agreements. An employee separation template has a basic motive of avoiding legal actions between workers and employers. They can edit and sign the agreement according to their decided terms by using CocoDoc.