What is an employee separation agreement?

Learn what employee separation agreements are, why companies use them, and what they should cover.

Sometimes an employee and an employer just aren’t the right match for each other. These sorts of situations are never pleasant, but you can make it less difficult with an employee separation agreement. This guide outlines the basics of an employee separation agreement and what it should include.

What is an employee separation agreement?

An employee separation agreement establishes a contractual understanding between the employer and the soon-to-be ex-employee. By signing the document, the parties agree to its terms for terminating the employment contract.

Employers often use separation agreements to cover themselves against potential lawsuits, but they can also include clauses that benefit the terminated employee. A well-crafted employee separation agreement can actually be beneficial to both parties.

What should an employee separation agreement include?

Most employee separation agreements require the employee to waive any potential legal claims. These could include employment law, compensation, and discrimination claims. For employers, this is often the primary purpose of the agreement.

In exchange for waiving the claims, an employee separation agreement can offer a severance package to the employee. Severance is not required, but it’s often a good incentive for the employee to sign the document. It can also help enhance a company’s reputation.

The agreement can also include any number of other clauses, such as confidentiality or no-compete clauses, and require the employee to return any company tools or property. Each state has different laws on what an employee separation agreement can include, so check the details with your local employment authority.

How can I easily share and sign an employee separation agreement?

To make signing an employee separation agreement simpler, make it a digital document. With Acrobat Sign, you can easily share documents with several recipients, request legally binding e-signatures, protect documents, and much more.

Discover more ways Sign can help make your business operations smoother.