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Severance Agreement

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Separation Agreement & General Release

CONFIDENTIAL

Re: Separation Agreement and General Release

Dear

This letter proposes the following Separation Agreement and General Release ("Agreement") between you and ("Company") regarding the terms of your separation from .

I. Background

A. You were employed by the Company as . You and the Company have agreed to terminate your employment relationship on an amicable basis.

B. On , your employment with the Company terminated.

II. Terms of Agreement

In order to effect the termination of your employment and to provide you with certain benefits that you would not otherwise be entitled to, you and the Company agree as follows:

1. This Agreement shall not be in any way construed as an admission by the Company that it has acted wrongfully with respect to you or any other person, or that you have any rights whatsoever against the Company.

2. Even if you do not sign this Agreement, the Company will pay you the compensation that you have earned through the date of your termination, any accrued vacation benefits, and in accordance with the terms and conditions of such plan. Similarly, even if you do not sign this Agreement, you will be offered benefits to which you are entitled under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), and you retain all benefits under the Company's 401(k) Plan.

3. In exchange for the promises contained in this Agreement and release of claims as set forth below, and provided that you sign this agreement and return it to me by {21 days from date of letter}, and do not revoke this Agreement as set forth in Paragraph 13(d):

a. The Company will pay you a severance allowance in the amount of your current base monthly salary of $ beginning and ending to be paid on a monthly basis and in accordance with the Company's normal payroll process.

b. The Company will pay for your medical coverage (i.e., COBRA benefits) under the .

c. If you wish, the Company will pay for an outplacement service (to be selected by the Company) for services rendered in assisting you in locating another job, for a period of months following the date of your termination or until you begin working for another employer, whichever occurs first. These payments are contingent upon your cooperation with the outplacement service and upon active efforts by you to locate another position.

4. In consideration of the promises contained in this Agreement, you agree:

a. On behalf of yourself and anyone claiming through you, irrevocably and unconditionally to release, acquit and forever discharge the Company and/or its parent corporation, subsidiaries, divisions, predecessors, successors and assigns, as well as each's past and present officers, directors, employees, shareholders, trustees, joint venturers, partners, and anyone claiming through them (hereinafter "Releasees" collectively), in each's individual and/or corporate capacities, from any and all claims, liabilities, promises, actions, damages and the like, known or unknown, which you ever had against any of the Releasees arising out of or relating to your employment with the Company and/or the termination of your employment with the Company. Said claims include, but are not limited to: (1) employment discrimination (including claims of sex discrimination and/or sexual harassment) and retaliation under Title VII (42 U.S.C.A. 2000e etc.) and under 42 U.S.C.A. section 1981 and section 1983, age discrimination under the Age Discrimination in Employment Act (29 U.S.C.A. sections 621-634) as amended, under any relevant state statutes or municipal ordinances; (2) disputed wages; (3) wrongful discharge and/or breach of any alleged employment contract; and (4) claims based on any tort, such as invasion of privacy, defamation, fraud and infliction of emotional distress.

b. That you shall not bring any legal action against any of the Releasees for any claim waived and released under this Agreement and that you represent and warrant that no such claim has been filed to date. You further agree that should you bring any type of administrative or legal action arising out of claims waived under this Agreement, you will bear all legal fees and costs, including those of the Releasees.

5. You agree to refer any and all reference checks to the and you know that any such references will be limited to confirmation of your dates of employment and last position held. The obligation under this Paragraph is separable and any failure by the Company to perform the obligation in this Paragraph will only give rise to an action to enforce this Paragraph.

6. You agree that you will not, directly or indirectly, disclose the fact of and terms of this Agreement, including the severance benefits, to anyone other than your attorney, except to the extent such disclosure may be required for accounting or tax reporting purposes or as otherwise required by law.

7. This agreement shall be binding on the parties and upon their heirs, administrators, representatives, executors, successors and assigns and shall inure to their benefit and to that of their heirs, administrators, representatives, executors, successors and assigns.

8. On or before , you will return to me all of the Company's property in your possession including, but not limited to, {insert appropriate materials, such as customer lists, mailing lists, account information, samples, prototypes, price lists and pricing information}, any phone cards, cellular phone, automobile and all of the tangible and intangible property belonging to the Company and relating to your employment with the Company. You further represent and warrant that you have not retained any copies, electronic or otherwise, of such property.

9. You will cooperate fully with the Company in its defense of or other participation in any administrative, judicial or other proceeding arising from any charge, complaint or other action that has been or may be filed.

10. You will continue to comply with the terms of the Proprietary and Confidentiality Agreement between you and the Company, executed on and know and understand that the obligations contained in that agreement survive execution of this Agreement and your termination of employment. In particular, you shall not disclose any confidential or proprietary information (specifically including pricing, margins, key customer contacts and their profiles not generally known to the public) which you acquired as an employee of the Company to any other person or entity, or use such information in any manner that is detrimental to the interest of the Company.

11. You agree that you will not make any comments relating to the Company or its employees which are critical, derogatory or which may tend to injure the business of the Company.

12. In the event that you breach any of your obligations under Paragraphs 8 through 11, any outstanding obligations of the Company hereunder shall immediately terminate, and any payments previously made to you pursuant to Paragraph 3 shall be returned to the Company.

13. You also acknowledge that you have been informed pursuant to the federal Older Workers Benefit Protection Act of 1990 that:

a. You have the right to consult with an attorney before signing this Agreement;

b. You do not waive rights or claims under the federal Age Discrimination in Employment Act that may arise after the date this waiver is executed.

c. You have twenty-one (21) days from the date of this letter to consider this Agreement;

d. You have seven (7) days after signing this Agreement to revoke the Agreement, and the Agreement will not be effective until that revocation period has expired.

14. The provisions of this Agreement are severable. If any provision is held to be invalid or unenforceable, it shall not affect the validity or enforceability of any other provision.

15. This Agreement sets forth the entire agreement between you and the Company and supersedes any and all prior oral or written agreements or understandings between you and the Company concerning the subject matter of this Agreement. This Agreement may not be altered, amended or modified, except by a further written document signed by you and the Company.

16. {If appropriate include arbitration clause}.

17. You represent that you fully understand your right to review all aspects of this Agreement with an attorney of your choice, that you have had the opportunity to consult with an attorney of your choice, that you have carefully read and fully understand all the provisions of this Agreement and that you are freely, knowingly and voluntarily entering into this Separation Agreement and General Release.

If you are willing to enter into this Agreement, please signify your acceptance in the space indicated below, and return to me by {insert date} [21 days], As I noted earlier, this Agreement will not become effective, and none of the severance benefits in Paragraph 3 will be paid, until seven (7) days after the date you sign this Agreement.

PLEASE READ CAREFULLY. YOU ARE GIVING UP ANY LEGAL CLAIMS THAT YOU HAVE AGAINST THE COMPANY BY SIGNING THIS AGREEMENT.

Very truly yours,

Signature
Accepted and agreed to on this day of ,
Employee signature
Witness:
Date:
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What a Severance Agreement Is and when it’s used

A Severance Agreement is a written contract between an employer and an employee that sets the terms for separation of employment, including severance pay, release of claims, confidentiality, and post-employment obligations. It typically identifies parties, effective date, payment schedule, continuing benefits or COBRA handling, tax treatment of payments, and any mutual non-disparagement clauses. Severance Agreements often include a release of claims in exchange for consideration and may reference additional documents such as restrictive covenants, stock vesting schedules, or separation letters. Parties should confirm enforceability under applicable federal and state law.

Why a clear Severance Agreement matters

A well‑drafted Severance Agreement reduces litigation risk, clarifies payment and benefit obligations, preserves confidential information, and sets enforceable post‑employment rules. It provides certainty for both parties about timing, tax handling, and dispute resolution while documenting the employer’s obligations and any employee release of claims.

Why a clear Severance Agreement matters

Who typically prepares and signs this agreement

Employers, HR teams, in‑house counsel, employment lawyers, and departing employees are the primary parties who prepare, review, and sign Severance Agreements.

  • HR professionals managing separation logistics and benefits communications.
  • General counsel or outside employment counsel drafting releases and clauses.
  • Employees reviewing consideration, revocation rights, and tax implications.

Each party should confirm authority to bind the organization and consider legal review when the agreement waives statutory rights or includes noncompetition clauses.

Common signatories and their roles

Employer Representative

Chief HR officer or authorized manager signs to bind the company and confirm payment and benefit arrangements. They typically confirm payroll processing, COBRA notices, and any continued health coverage responsibilities.

Employee Signer

Departing employee signs to accept the offered consideration and any release of claims. Employees over age 40 must verify timing and revocation rights under the Older Workers Benefit Protection Act when a discrimination waiver is involved.

Core clauses every professional Severance Agreement should include

A standard agreement organizes obligations, releases, and events to avoid ambiguity and support enforceability across jurisdictions.

Consideration

Specify the exact payment amount, schedule, and form (gross or net), and whether payments are single lump sum or installments to avoid ambiguity about tax withholding and timing.

Release of Claims

State precisely which claims the employee releases and any exceptions; include scope, duration, and whether the release complies with federal statutes such as the Older Workers Benefit Protection Act where applicable.

Confidentiality

Define confidential information, permitted disclosures, and carve‑outs for required reporting or defense against unlawful acts to protect trade secrets while allowing legal compliance.

Non‑Disparagement

Outline mutual or one‑way non‑disparagement terms, remedies for breaches, and how public statements or social media conduct are evaluated under the agreement.

Benefits and COBRA

Describe continuation of health benefits, COBRA premium subsidy if any, and the party responsible for notices and administrative steps to avoid coverage lapses.

Tax and Withholding

Clarify tax treatment, withholding responsibility, whether payments are wages or settlement, and any gross‑up provisions for tax reporting and withholding accuracy.

Step‑by‑step: completing and issuing a Severance Agreement

Follow this sequence to prepare, review, deliver, and finalize a severance agreement efficiently and with legal safeguards.

  • 01
    Draft: Prepare terms and required clauses for review.
  • 02
    Legal Review: Have counsel confirm statutory waivers and compliance.
  • 03
    Deliver: Provide agreement and any disclosures to the employee.
  • 04
    Execute: Collect signatures, confirm consideration and effective dates.

Typical e‑sign workflow for a Severance Agreement

Electronic workflows streamline distribution and create an audit trail while preserving legal validity under U.S. e‑signature laws.

  • Upload Document: Add the finalized agreement file to the signing platform.
  • Place Fields: Insert signature, date, and initial fields where required.
  • Add Signers: Enter signer emails and role order if sequential signing is required.
  • Send & Track: Send signing link and monitor completion with an audit trail.

Key digital workflow settings to configure

Configure signer authentication, field behavior, and notifications to match the agreement’s legal needs and organizational policies.

Field Configuration
Signature Type Click‑to‑sign or drawn signature allowed
Authentication Email, SMS code, or advanced ID verification
Expiry Set link expiry and remind intervals
Audit Trail Capture IP, timestamps, and action history

Technical considerations for electronic execution

Ensure your eSignature platform supports required authentication, retention, and export formats before sending for signature.

  • Integrations: Salesforce, NetSuite, Google Workspace
  • File Types: PDF, DOCX, HTML
  • Security: AES‑256 at rest

Confirm the platform stores a tamper‑evident audit trail and allows export of signed PDFs and compliance reports for recordkeeping.

Security and compliance features to verify

Encryption: TLS 1.2/1.3 in transit
At‑Rest Protection: AES‑256 encryption at rest
Standards: SOC 2 Type II available
Healthcare: HIPAA support with BAA
Regulatory: 21 CFR Part 11 support
Privacy: GDPR and CCPA compliant

Legal risks and consequences of errors

Unenforceable Release: Waiver invalid if procedural requirements not met
Age Claims: ADEA waivers need OWBPA timing
Tax Misreporting: Incorrect classification affects W‑2/1099 reporting
Breach Liability: Confidentiality breach can trigger damages
Missing Signatures: Unsigned pages may void the agreement
Improper Notarization: Invalid notary can undermine authentication

Common preparation mistakes to avoid

  • Vague consideration terms that leave payment timing or amounts ambiguous and delay payroll or tax reporting.
  • Failing to include required OWBPA language and timing for employees age forty or older when obtaining ADEA waivers.
  • Overbroad release clauses that unintentionally waive statutory rights or fail to carve out unemployment claims and government benefits.
  • Neglecting to set clear governing law and venue, which can complicate enforcement and increase litigation costs.

Key statutory deadlines and timing items to track

Certain timelines affect enforceability and employee rights; track these dates carefully when preparing or delivering a severance agreement.

Consideration Period:

Allow at least 21 days for older workers when waiving ADEA rights

Revocation Window:

Provide a 7‑day post‑signing revocation period for OWBPA waivers

COBRA Notices:

Provide required COBRA election information within statutory timelines

Tax Reporting:

Treat severance per IRS guidance and report on W‑2 or 1099 as applicable

Recordkeeping:

Retain executed agreements according to corporate retention policy

Sample vendor pricing and capability comparison

Pricing varies by billing model and plan features. The table below shows starting prices and common capability markers for comparison.

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 Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No
Envelope Cap No cap 100 envelopes/user/year Varies Varies Varies

Frequently asked questions about Severance Agreements

Answers to common legal and practical questions when preparing, delivering, or signing a Severance Agreement.


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