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Severance Agreement


A severance agreement is between the employer and employee to set out the terms for payment of compensation to the employee upon termination of employment. The Agreement sets out the terms for severance amount, employment termination and general release of claims.

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Document Description

The Severance Agreement is a legal document that outlines the terms and conditions of the termination of the employment relationship between an employee and a company. It is important because it ensures that both parties are aware of their rights and obligations upon termination.


The entire document consists of 18 clauses, each addressing a specific aspect of the agreement.


Clause 1 states that the company will pay a severance amount to the employee as a benefit. The employee must not revoke the agreement within a specified period to receive the severance amount.


Clause 2 clarifies that apart from the severance amount, the employee is not entitled to any other payments or benefits from the company. The severance amount will be subject to tax deductions.


Clause 3 states that the company will deliver the severance amount to the employee by a specified payment date.


Clause 4 acknowledges that the severance amount is a valuable consideration for the employee and that they have agreed to the terms of the agreement, including the release of claims.


Clause 5 confirms that the employee's employment relationship with the company has been severed, and the company has no obligation to rehire or employ them in the future. The employee must not represent themselves as an employee of the company after the termination date.


Clause 6 requires the employee to return all company property by the termination date and continue to be bound by confidentiality and restrictive covenants.


Clause 7 states that the employee agrees to indemnify and release the company and its affiliates from any claims related to their employment or termination. However, this does not waive the employee's right to enforce the terms of the agreement.


Clause 8 confirms that the employee has received independent legal advice and waives all rights or claims against the company. The employee must submit a certificate from their legal practitioner to the company.


Clause 9 provides the employee with a 21-day period to review and consider the agreement. The agreement becomes effective seven days after its execution, and the employee can revoke it within that period.


Clause 10 clarifies that the agreement does not constitute an admission of wrongdoing by the company.


Clause 11 prohibits the employee and the company from making defamatory or disparaging remarks about each other. The company agrees to provide a neutral reference regarding the employee's employment.


Clause 12 requires the employee to keep the terms of the agreement confidential, except when required by law or court order.


Clause 13 states that the agreement supersedes any prior written or oral agreements between the parties.


Clause 14 ensures that if any term or condition of the agreement is held invalid, the remaining terms and conditions will still be enforceable.


Clause 15 states that each party will bear its own costs related to the agreement.


Clause 16 confirms that the agreement is binding on the assignees and successors of the parties.


Clause 17 specifies the jurisdiction for any disputes arising from the agreement.


Clause 18 allows the agreement to be executed in counterparts, with each counterpart having the same effect as the others.

How to use this document?

To use the Severance Agreement document, follow these steps:


1. Review the entire agreement to understand its terms and conditions.

2. Ensure that both parties, the employee and the company, have agreed to terminate the employment relationship.

3. Determine the severance amount to be paid to the employee and the payment date.

4. Make sure that the employee understands that apart from the severance amount, they are not entitled to any other payments or benefits from the company.

5. Confirm that the employee will return all company property by the termination date and continue to abide by confidentiality and restrictive covenants.

6. Discuss with the employee the indemnification and release clause, ensuring that they understand its implications.

7. Advise the employee to seek independent legal advice and provide them with a copy of the agreement to share with their legal practitioner.

8. Request the employee to submit a signed certificate from their legal practitioner confirming that they have received independent legal advice.

9. Allow the employee a 21-day period to review and consider the agreement, and inform them that they can revoke it within seven days after its execution.

10. Once the agreement becomes effective, deliver the severance amount to the employee by the specified payment date.

11. Remind the employee of their obligations regarding confidentiality and making defamatory or disparaging remarks.

12. Keep a copy of the agreement for both parties' records.

13. In case of any disputes, refer to the jurisdiction clause specified in the agreement.

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