Severance Payment
Specify gross and net amounts, payment schedule, payroll tax treatment, and whether payment is conditional on execution or noncompete compliance.
Establishing secure connection…Loading editor…Preparing document…
Separation Agreement
This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!
What a Separation Agreement Is and when it's used
Why a clear Separation Agreement matters
A well-drafted Separation Agreement reduces litigation risk, clarifies obligations, and documents consideration exchanged. It protects confidential information, defines final compensation, and can include release language that resolves potential claims.
Who commonly prepares and signs these agreements
Each signer should confirm identity, dates, and any statutory consideration periods before signing to avoid later dispute.
- Human Resources — Prepares standard terms, coordinates benefits continuation and paperwork for departures.
- Employees — Reviews terms, negotiates severance, and confirms understanding of releases and noncompetes.
- Employment Counsel — Advises on enforceability, statutory waivers, and risk mitigation for both parties.
Step-by-step: completing and executing the agreement
-
01Draft Terms: Document compensation, benefits, release language, and effective date.
-
02Legal Review: Have counsel check enforceability and statutory waiver requirements.
-
03Signatures: Collect signatures in the specified order and format.
-
04Record Retention: Store the executed agreement in a secure records system.
Key clauses to include in a professional Separation Agreement
Release of Claims
Define which claims are waived, the effective date of the release, and any carve‑outs for future or statutory claims.
Confidentiality
Set obligations for protecting proprietary information, trade secrets, and define permitted disclosures.
Noncompete / Nonsolicit
Include geographic scope, duration, and specific prohibited activities consistent with applicable state law.
Benefits & COBRA
Detail health benefits continuation, COBRA election periods, and any employer contributions during the transition.
Dispute Resolution
Specify mediation, arbitration, or litigation venue and whether attorney fees are recoverable for enforcement.
Supporting provisions and practical attachments to include
Exhibit A: Payment Schedule
Attach a clear schedule showing dates, amounts, and tax handling. Include how lump sums are treated versus installments and any conditional payments tied to noncompete compliance or return of company property.
Exhibit B: Release Language
Provide the full text of the mutual release as an exhibit. Use language that specifies claims released, effective scope, and carve-outs for future claims or government benefits.
Exhibit C: Return of Property
List company property to be returned, deadlines, and the condition in which items must be returned; note that failure to return property may affect final payments.
Exhibit D: Confidentiality Addendum
Include precise definitions of Confidential Information and permissible disclosures, including obligations after termination and any HIPAA or privacy addenda if health data is involved.
Digital signing, authentication, and technical delivery
Use a solution that produces a tamper-evident signed file and retains a searchable audit trail for future enforcement or review.
- Signature Format: PDF/A or DOCX recommended.
- Authentication: Email + optional SMS or ID check.
- Audit Trail: Capture IP, timestamp, and actions.
Typical online workflow settings for a Separation Agreement
| Field | Configuration |
|---|---|
| Signer Order | Employer first, employee second. |
| Required Fields | Names, dates, initials, signature |
| Authentication | Email link; add SMS or ID check if needed |
| Retention | Enable secure storage and audit log |
Where to send and how signed copies are delivered
-
Sender Uploads: Upload final agreement to the signing platform.
-
Place Fields: Add signature, date, and initial fields in proper order.
-
Send to Signers: Distribute via email or secure link; set authentication.
-
Archive Copies: Each signer receives signed PDF and audit certificate.
Typical timing and deadlines to plan for
Review Period:
Allow at least several business days for counsel review.
Negotiation Window:
Reserve 7–21 days for back-and-forth depending on complexity.
Execution Date:
Specify MM/DD/YYYY as the effective date in the agreement.
Payment Timing:
State exact payment dates or payroll cycle for severance.
Revocation Window:
If statutory waivers apply, allow any required revocation period.
Common mistakes to avoid when preparing a Separation Agreement
- Using vague consideration language such as 'reasonable sum' rather than a specific dollar amount creates enforceability issues and tax uncertainty.
- Failing to specify governing law and jurisdiction can cause forum disputes and complicate enforcement across states.
- Neglecting required statutory processes for waiving age or discrimination claims can render releases invalid under federal or state law.
- Relying on unsigned or improperly attributed electronic signatures without a clear audit trail risks later repudiation of the agreement.
Legal risks and consequences of an incorrect or incomplete agreement
Invalid Release:
May lead to continued claims and litigation.
Tax Exposure:
Incorrect withholding or reporting triggers audits.
Enforcement Problems:
Poorly drafted restrictive covenants may be unenforceable.
Regulatory Noncompliance:
HIPAA or labor law breaches can produce fines.
Reputational Risk:
Disputes can harm employer brand.
Recordkeeping Violations:
Failure to retain may impede defense in claims.
Comparison of eSignature vendor pricing and core limits
| signNow | DocuSign | Adobe Sign | PandaDoc | HelloSign | |
|---|---|---|---|---|---|
| Starting Price | $8/user/mo | $15/user/mo | $14/user/mo | $19/user/mo | $15/user/mo |
| Free Trial | 7-day free trial | Varies by plan | Varies by plan | Varies by plan | Varies by plan |
| Bulk Send | Yes (Premium tier) | Yes | Yes | Yes | No |
| Audit Trail | Yes | Yes | Yes | Yes | Yes |
| Envelope Cap | No cap | 100 envelopes/user/year | Varies | Varies | Varies |
Frequently asked questions about Separation Agreements
-
Can a Separation Agreement be signed electronically?
Yes in most U.S. jurisdictions where ESIGN or UETA applies. New York accepts electronic signatures under ESRA. Verify state-specific notarization or witness rules before relying on e-signature for documents requiring additional formalities.
-
Do I need a notary or witnesses?
Most employment separation agreements do not require notarization or witnesses, but state or industry circumstances may require them. Use notarization where signatures may be contested or when local law or employer policy mandates it.
-
How long should I keep the executed agreement?
Keep the executed agreement for the term of obligations plus at least three years; healthcare-related records require six years under HIPAA. Retain longer if tax, property, or litigation risks exist.
-
What happens if someone signs the wrong name?
A mismatched name can complicate attribution and tax reporting. Correct errors promptly with an amendment or acknowledgement signed and dated by the proper party.
-
Can an employee revoke a release after signing?
Certain statutory waivers (for example, age discrimination waivers) may include a required revocation window; consult counsel to confirm any mandatory consideration or revocation periods.
-
How do I verify identity for electronic signatures?
Use at least email link authentication; add SMS, knowledge-based ID checks, or certified ID verification for higher-risk agreements and to strengthen attribution in disputes.
be ready to get more
Join over 28 million airSlate SignNow users