Introduction
An employment separation agreement is the same as any other contract. It can also be enforceable like other contracts. Basically, through an employment separation agreement, the employee waives their future rights to claim against a former employer. All the terms of that agreement are legally valid and binding to both parties. Thus, it is legally enforceable by law.
The key factors of the employment separation agreement are:
- It is legally enforceable by law.
- If any agreement terms do not meet an existing law, it automatically becomes void because it is prohibited by law for enforceability.
Some of the contract terms can be challenged by the employee in court, such as restricting him from a job after their employment agreement. Now, look at which circumstances an employment separation agreement can be enforced.
What is an employment separation agreement?
The employment separation agreement is a contract between an employer and an employee soon to be fired. It is also known as a compromise agreement. It specifies that both contracting parties agree to the termination. In this way, it protects the employer from the claims of unlawful dismissal.
Understanding of an employment separation agreement
An employment separation agreement is a written document of contractual understanding between the employer and the employee soon to be fired. It stipulates that they agree to the terms of that agreement, and both parties make their sign on it.
This agreement is beneficial for employers. It protects against the lawsuits. However, all the clauses in it will not protect them. Some of the clauses favor the employees. But after all, we can say that a well-drafted employment separation agreement benefits both contracting parties.
The employers often stipulated attractive incentives for the employees to sign the agreement, such as severance packages. This agreement also specifies that the former employee who is terminated by the employer can not work in the same field or do not share trade secrets. In some cases, to make a happy ending to the relationship, the contracting parties can negotiate a mutual separation agreement before entering into the contract.
What should we need to include in an employment separation agreement?
As we discussed, an employment separation agreement is a contractual agreement that is legally binding contract and enforceable in court. If any contracting parties violate, it becomes an unenforceable contract. That’s why it is advisable to prepare by a qualified attorney. That agreement can vary upon the different employees as it can not be used as identical for all employees. However, some of the provisions that are commonly used to include that are given below;
Waiver of potential legal claims:
This is a significant clause of an employment separation agreement. By adding this clause, soon-to-be-terminated employee waives their right to file a lawsuit against the company. There are also other related clauses, such as compensation claims, employment law claims, unlawful termination claims, etc.
Severance pay and packages:
A severance pay and packages are offers given by the company to the employee in the terms of exchange for waiving the claims. There is no mandatory requirement for severance to the employee. However, the company offers good incentives to the employee for the sign purpose of the employee separation agreement. It has a positive impact on the company’s reputation.
Details of other important clauses:
Several additional clauses also can be included in the agreement that are given below;
- Confidentiality clause, this clause ensures that the secret can kept private by the employee.
- A non-disparagement clause, this clause will give insurance that the terminated employee can not criticize the employer. And strictly follow the terms of the agreement.
- A non-complete clause, this clause ensures that the employee can not work in a similar position in a similar field or a competing business.
- A non-disclosure clause, this clause ensures that the terms and conditions of the agreements are kept private by the employee.
When does the employment separation agreement become void?
Contracting disputes depend upon the type of employment contract and the subject matter of it. That may vary in different contracts. If any terms of the agreement do not meet the provisions of the law, such can be declared void. The one notable thing that we should note is there is a difference between a void and an Illegal agreement. If any terms of the employment separation agreement are affected by law and directly concern harms of individual rights. Such a contract may seem to be unenforceable by law.
An employer can not include the following terms called restrictive covenants.
- By imposing restrictions on the former employee’s activities if they do not hurt the employer’s business.
- To prevent a former employee from working with a competitor in the same business.
- To prevent contact with former clients and prevent them from entering into the contracts. Unless it does not negatively impact the employer’s business.
However, if an employer wants to prevent the former employee’s action, they must prove it with evidence. Why it is necessary to prevent them protect their business interest?
How to handle a separation employment agreement?
After preparing a draft of an employment separation agreement, send that draft to your legal team to verify all the terms and conditions of that agreement and ensure that it is prepared under provisions of law. If any confusion arises in your mind related to the terms of such an agreement, you can seek legal advice for all clauses.
This process varies on the separation methods. If an employee chooses voluntary retirement and quits the company, then the terms of the reparation agreement will be changed accordingly. If an employee is fired for weak performance, that is known as involuntary, and in that case, the separation agreement will be changed.
In the case of voluntary leave, an employee gives advance notice before they leave the organization, while involuntary leave acts immediately, and the separation agreement needs to be sent earlier.
How does an employment separation agreement become beneficial for both parties?
The employee separation agreement is beneficial to both parties because it creates more clarity between them. As discussed above, all the terms and conditions are prescribed in this agreement. That makes a legally binding agreement between them.
Moreover, the employee separation agreement protects the employer from future claims and litigations. It is also beneficial for the employees because they get an attractive severance package while they agree. So, both parties peacefully end their professional relationship through the separation agreement of employment. And more importantly thing, it is also a legally enforceable agreement in a court of law.
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