What Is A Severance Agreement?
In business, there are many aspects to consider to make it run smoothly. It includes the employees as one of the company’s assets that should be hired carefully. We do this, of course, but over time, we find some difficulties in dealing with the employees who are no longer having the same vision with the company. The only option is to cut off them and hire the new one who gives us more chance to make a better environment. If you are facing this, you probably need the severance agreement templates.
If you are planning to write a severance letter, then you need the severance agreement and general release. It is one of the compulsory which the company should give compensation to the former employee for laying off the employees, which also causes some loss for them.
The severance agreement is also known as the separation agreement. This letter is made by the company which outlines details of whether the company will terminate the contract with the employee. This agreement is necessary which if the employees have agreed to sign the letter, then they are free from the lawsuit filed against these employees. Meanwhile, the compensation is the benefit which is also called the severance package.
Each employer needs to write this agreement specifically with readable language along with the benefits included. The clarity should also include the payment amount etc. For further explanation, you can check the elements bellow.
How To Write A Severance Letter
There are several things that you need to pay attention when writing the severance letter, which are:
- Severance pay – As we have mentioned earlier, the severance agreement should also include the severance pay which the former employees can use to sustain their needs while looking for a decent job. However, note that the severance pay should depend on the career and the employee’s performance in the company. Usually, this severance pay is longer when the employees have done an excellent job and have brought a very beneficial thing to the company.
- Healthcare benefit – If you are going to lay off your employees, you might want to consider the healthcare benefits. However, this support will end after the maximum date has expired. It also depends on the employees’ performance during their time in the company. It will give the right image for the companies too.
- Confidentiality – In most the agreements, there is a confidentiality matter that the employers want the former employees to keep. The former employees should not post bad comments, and they need to leave good references to the company. Besides, the former employees are not allowed to share any sensitive information to another party because it can damage the business too.
- Non-disparagement – Because the employees will sign the agreement, then they need to promise they will not leave lousy reputation that brings the company’s name.
Last, once the employee has signed the severance agreement template, they should not use the company that will make the company’s image terrible. In case there is a severe problem such as inconsistency severance pay, they cannot use the company for their benefits.
Sample Severance Agreement Template