Importance of Release Agreements

A Release/Severance Agreement refers to a contract between an employer and employee that details the rights and responsibilities of both parties in the event of job termination. It is meant to protect the newly unemployed. In most cases details of this may be provided in employee handbooks.

A proper Release Agreement may include the following; the amount of any Release pay in lieu of contracted notice period, any extended benefits such as healthcare or insurance and the length of time they will be provided, a non-compete clause forbidding the employee to work for a competitor within a given time period and an agreement that one will not file a wrongful dismissal lawsuit.

As it can be seen, the Release Agreement is in most cases one sided, and one is advised to read the Release agreement carefully and consult a lawyer if necessary, before accepting it. This is due to the fact it dictates what you can say about your former employer or workmates, as well as prove a headache when you are searching for a new job.

It should be noted, however, that an employee has the leverage to bargain the terms of their release agreement. The emotional stress that follows job termination can be devastating, so it is wise to plan in advance.A carefully negotiated agreement protects the employee from future misfortunes such as unemployment and ensures that one gets all their stipulated benefits.

The issuance of a release package is made when one signs the Release Agreement. The amount of money to be paid out is dependent on the length of employment prior to termination. This may include payment for unused vacation and sick days, and unreimbursed business expenses.

The importance of a Release Agreement, and a carefully negotiated one at that, cannot be thus understated. It is vital for one to find out what their Release contract states and to renegotiate the unfavorable terms

Additional information from;

“Understanding and Negotiating Employment Severance Agreements”



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