Separation Agreement

On some occasions, a company looking to terminate a worker’s employment will offer the person a separation agreement, providing additional wages or benefits in exchange for the employee’s agreement not to sue, not to compete, or not to disclose trade secrets. Separation agreements are contracts between the employer and employee, generally written by the employer’s attorney. If the employee is age 40 or over, she must be given a 21-day period to review the document, and consult with an attorney if the employee wishes. These contractual agreements are used to establish the terms in which an employee will leave their position once they have been terminated. Separation agreements are unique in that they can be used by both employers and employees, and they can be used temporarily to provide financial assistance to an employee while limiting an employer’s liability.

Separation agreements are also used to legally prevent a former worker from disclosing information about the business (including any trade secrets or operational procedures), from suing the company, or from trying to take clients away from the organization. Because there are numerous implications surrounding a separation agreement, it is of the utmost importance that both employers and employees seek the expertise of an employment lawyer before signing a separation agreement. Janovsky & Associates is experienced in Texas and California employment law, and represents both employers and employees in these types of matters.

What is a Separation Agreement?

Separation agreements typically list the conditions both the employer and employee have agreed upon regarding what will happen in the event of termination. It is important to note that the conditions outlined by a separation agreement supersede all other agreements, including an employment contract. The most common items included in a separation agreement include:

Details of the separation of employment – This will include both the employment and termination date and may also have a section outlining a specific reason for leaving the job (such as resignation, termination, or layoff)
A severance package – Not all separation agreements include mention of a severance package, but this is an option that many employees push for. While the law only states that employees must be awarded wages for their working days and any accrued vacation days, some companies include severance pay
Amount paid out and way of delivery – If the employer opts to include a severance package, the separation agreement will detail how much will be paid out and the method of delivery
Tax and insurance details – All separation agreements must provide details on the tax deductions and insurance policy
Non-compete clause – In some cases an employer will include a non-compete agreement, which restricts an employee from seeking gainful employment within a specific period or in a specific location, or both

Regardless of the employee’s age, most separation agreements are open to negotiation of its terms. If you need assistance drafting a separation agreement, or negotiating its terms, contact Attorney Janovsky for a consultation. Attorney Janovsky represents both employees and employers in Texas and California and would be happy to discuss your case with you today.

Legal Disclaimer: The information provided on this website is not legal advice, and does not establish an attorney-client relationship. The information is provided for informational purposes only.