Introduction
A mutual separation agreement (MSA) represents a deal you negotiate with your employer regarding the terms of leaving the organization. Usually, it deals in the form of compensation. On that basis, you agree to end your employment.
A mutual separation agreement is a document that specifies the terms and conditions in a written agreement form between the employer and employee related to the end of employment. It is a lawful agreement because the contracting parties mutually agree to end the employment relationship. That is why it is legally binding. In that agreement, the contracting parties mutually decide the terms and conditions. They include certain financial settlements or other benefits that are given to the employee at the agreed-upon end of employment.
Common Key Elements of a Mutual Separation Agreement
The following elements are commonly included in a mutual separation agreement:
Date of Termination:
The agreement should specify the date of termination. It makes clear when the employment relationship comes to an end.
Health Insurance:
These should be specified in the agreement, whether the employer provides the health insurance, and what will happen after the termination.
Severance package:
The severance package is the most important element in the mutual separation agreement. That clause specified what types of benefits an employee would receive after the agreed-upon termination. It will be decided based on the employee’s salary, service period, and such kinds other factors.
Retirement benefits:
In this clause, should be mentioned the details, if an employee is entitled to get retirement benefits or not.
Non-Disclosure Clause:
The mutual separation agreement may contain the details of non-disclosure like an employee can not disclose the confidential information of company and clients database.
Non-Compete Clause:
This clause specifies that an employee who leaves the company can not work with a competitor’s company for a specific time.
Non-Disparagement Clause :
This clause describes the details that the employer and employee agree to not go negatively on each other.
Waiver of rights:
It is the most important element of a mutual separation agreement. It specifies the terms related to the prohibition for an employee not to claim and agrees to waive this right by mutual understanding.
Additional clauses:
In this clause, the contracting parties can include any additional if required. Such as, it is required for employees to return the property of the company.
References and Remarks:
The mutual separation agreement may mention the provision that specifies details of how the employee reacts when the future employer investigates related to the employee’s job history.
Legal fees:
This clause may be specified in an agreement, that which party will bear the legal fees related to the negotiation and preparing a draft of the agreement.
Signatures:
To make a legal validity of a mutual separation agreement, the parties must approve the agreement by signing.
What is a mutual separation agreement?
A mutual separation agreement refers to the exchange as an employment separation agreement. Most probably, the content of both agreements refers to the same things. But there is a difference between them. A mutual separation agreement is made between an employee who is terminated to-be soon and his employer. Through this agreement, an employee waives their legal rights to take legal action against a former employer. To make a legal validity of a mutual separation agreement, the parties must approve the agreement by signing.
A mutual separation agreement provides certain attractive benefits to the employee for the signing. Thus, it is beneficial for both. Instance, the employee’s side receives some attractive benefits, and the employer’s side is protected from being sued by an employee.
How does a mutual separation agreement work?
The mutual separation agreement refers to the parties being agreeably separate from each other on the terms that are mentioned. It helps the employer to protect against potentially lengthy and costly legal proceedings. It also helps the employees because it protects their resume from getting negative “black marks.” It will help them to get another employer with the best reason, like leaving previous work based on a good reason.
Some other terms may be included in a mutual separation agreement that you should also need to know like there can be certain restrictions about the former employee’s activities. These terms include a non-discloser agreement in the corporate sectors, working restriction in a similar field for a specific period, not disparaging the former employer, etc.
However, if any terms and conditions do not meet the law and legal regulations or public policy, in that case, the mutual separation agreement becomes unenforceable by the law. Because always it is not possible to restrict the former employee a long time from working in a specific industry.
