Create and manage Employment Termination Agreements more efficiently with this free template, enabling HR professionals and business leaders to handle this sensitive contract at scale.
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Whether you expect it or not, a significant number of us will experience an employment termination at some point in our careers. Whether it's due to redundancy, performance issues, or mutual agreement, the process often involves an Employment Termination Agreement.
They’re a crucial tool for businesses that want to ensure a smooth and legally robust termination process. But what are Employment Termination Agreements, who uses them, and how can you create one? Let's find out.
An Employment Termination Agreement, also known as a Severance or Separation Agreement, is a contract that outlines the terms and conditions of an employee's departure from a company. It typically includes details about severance pay, benefits, and the return of company property.
Parties use this type of business contract to agree on the terms of the employee's departure and to prevent potential legal disputes in the future. In doing so, Employment Termination Agreements offer clarity and protection for both parties when it comes to sensitive issues like compensation, confidentiality, and non-disparagement clauses.
While the termination of employment can be a challenging process, these agreements are a critical tool for businesses, ensuring a clear, fair, and legally compliant termination process. But creating and reviewing Employment Termination Agreements at scale can quickly become a problem for HR and legal teams at fast-growth businesses, who often report feeling overwhelmed with the workload. Terminations are a fact of life at a large company, but they don't have to be an admin headache too.
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The most common use cases of Employment Termination Agreements include:
When a company is going through a restructuring or redundancy process, they often use these agreements to outline the terms of the employee's departure, including any redundancy pay, notice periods, and outplacement support.
If an employee is being let go due to performance or conduct issues, an Employment Termination Agreement can help to formalize the process and protect the company from potential legal disputes.
Sometimes, an employee and employer may mutually agree to part ways. In these cases, an Employment Termination Agreement can help to define the terms of the departure, including any final payments or benefits.
When an employee is retiring, an Employment Termination Agreement can be used to outline any final payments, pension arrangements, and the return of company property.
Employment Termination Agreements can affect various teams in different ways. HR professionals, legal teams, and business leaders will often need to create and review these agreements. Like plenty of HR contracts, if you have sensitive information that you need to protect, or if you want to ensure a smooth and legally compliant termination process, you're already a potential user.
However, you may find that legal counsel will often create and own the Employment Termination Agreement templates, and they will usually have approval rights too.
The information that your Employment Termination Agreement covers will depend on the needs of your business and the specific circumstances of the termination. However, certain categories of information almost always warrant protection. Here are some common examples of Employment Termination Agreement-protected information:
Employment Termination Agreements are legal contracts, which means that they are enforceable by law and within courts - so long as they are written and used correctly. However, certain clauses will not be legally binding if they are used to prevent whistleblowing in the public interest, which often involves telling the authorities about illegal or dangerous practices at work.
It is also worth noting that certain jurisdictions take a more generous approach when ruling on Employment Termination Agreements. For example, some states in the US have specific laws regarding severance pay and release of claims. With all of this complexity surrounding Employment Termination Agreements, it is important to get yours right the first time.
Finding a way to create and process Employment Termination Agreements at scale is important for any large or fast-growth business. Whether you’re experiencing difficulty deciding what your Employment Termination Agreement should include, or you’re simply unsure where to start, managing termination agreements can quickly become a bottleneck that holds your team back.
Below we’ll discuss how to create an Employment Termination Agreement, the challenges you might face and the clauses you should be sure to include.
Creating a comprehensive Employment Termination Agreement template is key to ensuring that your company’s termination process is smooth, fair, and legally compliant. This means you need to include all of the important information and necessary clauses within your Employment Termination Agreement.
Not sure what to include? Well, in addition to the basic elements of a contract, an Employment Termination Agreement will typically include the following provisions:
1. Details of the parties involved: Your Employment Termination Agreement should include basic information about the parties involved and the people that the agreement will cover. This should refer specifically to the employer and the employee involved in the agreement.
2. Reason for termination: The agreement should clearly state the reason for the termination of employment. This could be redundancy, performance issues, mutual agreement, or any other valid reason.
3. Severance pay: If the employee is entitled to severance pay, the agreement should specify the amount and the terms of payment.
4. Benefits and pension arrangements: The agreement should outline any arrangements regarding the employee's benefits and pension, including what will happen to these after the termination.
5. Confidentiality clause: The agreement should include a clause that requires the employee to keep certain information confidential, even after their employment has ended.
6. Non-disparagement clause: This clause prevents the employee from making negative or damaging statements about the employer after the termination.
7. Return of company property: The agreement should specify what company property the employee must return upon termination, and the process for doing so.
8. Release of claims: The agreement should include a clause in which the employee agrees not to sue the employer for wrongful termination or related claims.
9. Legal jurisdiction: The agreement should specify which jurisdiction's laws will govern the agreement and where any legal disputes will be resolved.
10. Additional clauses: Depending on the situation, some Employment Termination Agreements may require additional clauses on issues like non-compete agreements and future employment restrictions, all of which should be outlined from the offset.
Even with an exhaustive list of what to include, creating an Employment Termination Agreement from scratch can be a drag. In fact, HR professionals and business leaders often complain of how painful the process can be. At its worst, the process looks something like this:
A manager or HR professional emails a member of the legal team and says “I need an Employment Termination Agreement.” The legal counsel, likely buried in work, suggests that the user finds it themselves on the shared drive; they might eventually relent and email one across.
Somehow, the user finds a template (not necessarily the most current version), fills in various fields in square brackets and emails it to the legal team to review. Legal corrects various details and returns it to the user via email.
The user then sends the Employment Termination Agreement to the employee for review. They comment and mark up the contracts in Word, emailing it back. If there are still disagreements over the terms, each party will redline the document and pass it back and forth, typically saving and sharing a new document each time.
Eventually, an agreement is reached and both parties sign, either with a wet signature and a sign/scan/send process or an eSignature provider. This tends to be either Adobe Sign or DocuSign or a DocuSign alternative the company pays for separately. Once signed, the Employment Termination Agreement will be emailed to the relevant parties and stakeholders (HR, legal, and so on), and hopefully saved on a shared drive.
This approach to creating Employment Termination Agreements is incredibly inefficient and time-consuming. Let’s dig into why.
Building Employment Termination Agreements from the ground up is hard work. But why?
Low-value work: “I’m the General Counsel, responsible for the company’s legal affairs, and I'm stuck here telling business colleagues where they can find a document on a shared drive over and over again”
Version control risks: “As an HR professional, I never know which the most up-to-date template is - are these the right terms?”
Incorrect templates: “Do I need the standard Employment Termination Agreement or a specific version?”
Unprofessional: “Our Employment Termination Agreements vary so much and aren’t standardized contracts - as well as being risky, this looks amateurish”
Wasted time: “Negotiations on these agreements are getting lost in my emails”
Lost metadata: “I don’t have visibility post-signature of our agreements - I’m uncertain as to which of our terminations are governed by specific agreements.”
Fortunately, there's a faster and more efficient way to create Employment Termination Agreements. You can automate them. Modern, growing businesses are increasingly looking to automate routine contracts like Employment Termination Agreements.
By moving your Employment Termination Agreement to a contract automation platform, you can save time, cut out cross-platform hassle and free up the legal and HR team's time for high-value work.
With our automated templates, you can generate simple Employment Termination Agreements in seconds. Here’s how:
In most businesses, legal counsel will want to retain control over what is included in an Employment Termination Agreement, and how they are used. Within an automated workflow, in-house lawyers define and revise the terms of the Employment Termination Agreement using a contract template.
From here, other departments can self-serve on contracts from the template without altering the key language of the termination agreement.
At Juro, we see our customers empower a wide variety of business users to self-serve Employment Termination Agreements from templates. Most often, this activity will come from the HR teams, who send these agreements to employees during the termination process.
In an automated workflow, parties can use the Q&A workflow to populate the template with the necessary details, such as the employee's name, termination date, and severance pay. This process is quick, easy, and doesn't require any legal knowledge.
Once the agreement is created, it can be sent to the employee for review. Instead of downloading the document, making changes in Word (or redlining in DocuSign), and emailing it back, the employee can suggest changes and leave comments directly within the browser. This makes the negotiation process faster and more efficient, and ensures that all changes are tracked in one place.
Once both parties are happy with the agreement, they can sign it electronically within the same platform. This eliminates the need for printing, scanning, and emailing, and ensures that the signed agreement is stored securely in one place.
After the agreement is signed, it is automatically stored in a secure, searchable repository. This means that you can easily find and access your agreements whenever you need them, without having to dig through emails or shared drives.
Employment Termination Agreements are a crucial tool for businesses, ensuring a clear, fair, and legally compliant termination process. However, creating and managing these agreements can be a time-consuming and inefficient process. By automating your Employment Termination Agreements, you can save time, reduce risk, and free up your legal and HR teams to focus on more strategic tasks.
If you're ready to start automating your Employment Termination Agreements, we're here to help. Get in touch with us today to find out more about our contract automation platform and how it can help your business.
