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Sample Severance Agreement Template

Document Type
Microsoft Word (Editable)
Pages
3
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Document Overview

A Severance Agreement is a formal legal document between an employer and an employee that sets out the terms and conditions under which the employee’s employment is terminated. It typically includes details of severance pay, benefits, and the mutual release of claims between both parties.

The main purposes are:

1. To provide compensation — It ensures the employee receives financial benefits such as severance pay, accrued leave, and other dues upon termination.

2. To ensure legal compliance — Under Section 40 of the Employment Act, 2007, severance pay is mandatory in redundancy cases. The agreement helps the employer comply with this legal obligation.

3. To protect the employer from future claims — The employee formally releases the employer from any potential future legal action related to the employment or its termination.

4. To maintain confidentiality and reputation — It often includes clauses on confidentiality and non-disparagement, protecting both parties’ reputations.

5. To document mutual understanding — It serves as a written record of the agreed separation terms, preventing misunderstandings or disputes later.

6. To enable smooth transition — It facilitates the proper handover of company property and ensures both parties part on professional terms.
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