Separation and Release Agreement Template

In plain language: Identifies the employer and employee by legal name, states the official last day of employment, and sets the context for why the agreement is being entered into.

Common mistake: Using the offer date rather than the last day of employment as the 'Separation Date.' A mismatch between the agreement date and the actual last day creates ambiguity over when benefits, accrued PTO, and final pay obligations are triggered.

In plain language: States the exact severance amount or formula, whether it is paid as a lump sum or in installments, and the timing of the first payment — all conditioned on the release becoming effective.

Common mistake: Promising payment before the revocation period expires. Under ADEA/OWBPA, paying before the 7-day revocation window closes means the employer may owe severance even if the employee later revokes — obtain a signed, non-revoked agreement before releasing any funds.

In plain language: The core provision in which the employee releases all known and unknown claims against the employer — including discrimination, wage, breach of contract, and tort claims — arising from the employment relationship.

Common mistake: Omitting an explicit enumeration of federal and state statutes. Courts in several jurisdictions require that specific statutes be named for their waiver to be enforceable — a generic 'all claims' sweep is sometimes insufficient for ADEA and state discrimination laws.

In plain language: Mandatory notices for any employee aged 40 or older, including the right to a 21-day review period, the right to consult an attorney, and the 7-day post-signature revocation right.

Common mistake: Using the same template for employees under and over 40 without including ADEA disclosures for the latter. The release of age discrimination claims is entirely void — not merely voidable — if the OWBPA requirements are not met, exposing the employer to litigation with no release in place.

In plain language: Confirms that post-separation confidentiality obligations from the employment agreement survive, and prohibits the employee from disclosing or misusing proprietary information, customer data, or trade secrets.

Common mistake: Omitting reference to the underlying employment agreement. If the confidentiality clause in the separation agreement is narrower than the original employment agreement, it may inadvertently narrow the employer's protections.

In plain language: Restricts one or both parties from making negative, misleading, or damaging statements about the other — to the press, on social media, to customers, or to future employers.

Common mistake: Making the non-disparagement clause one-sided in favor of the employer only. Employees increasingly negotiate mutual obligations, and courts in some jurisdictions have found one-sided clauses to be inadequate consideration for the release.

In plain language: Requires the employee to return all company assets — devices, documents, keys, access credentials, and any proprietary materials — on or before the Separation Date.

Common mistake: Failing to list specific assets by type or asset tag. Vague return-of-property obligations are difficult to enforce and leave the employer unable to prove breach if a device or document is retained.

In plain language: States when employer-sponsored benefits terminate, confirms that COBRA continuation information will be provided, and addresses any agreed benefit extensions.

Common mistake: Omitting the COBRA notice obligation entirely. Under US federal law, employers must provide COBRA election notices within 14 days of a qualifying event — failure triggers statutory penalties of up to $110 per day.

In plain language: Reminds the employee that post-employment restrictive covenants from the original employment agreement remain in full force and are not waived by the separation.

Common mistake: Re-drafting restrictive covenants in the separation agreement rather than incorporating by reference. Redrafting creates a risk of inadvertently narrowing or expanding the original scope, triggering a fresh enforceability challenge.

In plain language: Specifies the applicable jurisdiction's employment law, the method for resolving disputes (arbitration or court), and confirms the agreement is the entire record of the parties' deal.

Common mistake: Choosing a governing law with no connection to the employee's actual work location. California, for example, applies its own law to California-based employees regardless of what the contract states — mismatched governing law clauses are routinely disregarded.

A separation and release agreement is a binding contract between an employer and a departing employee that documents the terms of separation — including severance pay — and obtains the employee's legally enforceable release of all employment-related claims against the employer. In exchange for the severance, the employee agrees not to sue for wrongful termination, discrimination, wage violations, or other claims arising from the employment relationship. It is the primary legal tool employers use to reduce litigation exposure when ending an employment relationship.

No law requires an employer to offer a separation agreement. However, if an employer chooses to offer severance, it is standard practice to condition that payment on the employee signing a release of claims. In the US, certain procedural requirements — particularly ADEA/OWBPA disclosures for employees aged 40 or older — are mandatory if the agreement includes a waiver of age discrimination claims. In Canada and the UK, written separation terms are strongly advisable to document that any payment meets or exceeds statutory minimums.

In the US, employees aged 40 or older must be given at least 21 calendar days to consider the agreement before signing; the period extends to 45 days for group layoffs. Employees under 40 are typically given a reasonable period — commonly 7 to 14 days — though this is not federally mandated. In Canada and the UK, there is no statutory minimum consideration period, but best practice is to allow at least 7 to 14 days and to advise the employee to seek independent legal advice.

In the US, employees aged 40 or older have an absolute right to revoke the agreement within 7 calendar days of signing, under OWBPA. The employer cannot waive or shorten this period. If the employee revokes, both the release and the severance obligation become void. For employees under 40, there is no federal revocation right, though some states provide one. Outside the US, revocation rights depend on local law — in the UK, for example, a signed COT3 or settlement agreement is generally binding immediately upon execution.

No. Under US federal law, an employee cannot waive the right to file a charge with the EEOC, the NLRB, or any government agency, even after signing a valid release. What a valid release does prevent is the employee from receiving any individual monetary recovery from claims they filed with those agencies. Employers must include an explicit carve-out clause acknowledging this limitation, or risk the EEOC invalidating the broader release as overreaching.

Employees can validly waive claims for wrongful termination, employment discrimination under Title VII and the ADA, wage and hour claims under the FLSA, and most state employment law claims. Claims that generally cannot be waived include future workers' compensation benefits, unemployment insurance eligibility, vested retirement plan benefits under ERISA, pending workers' compensation claims in many states, and the right to file an administrative charge with a government agency. Always have counsel confirm the list for the relevant jurisdiction before finalizing the release language.

The terms are often used interchangeably, but they have a meaningful distinction. A severance agreement primarily documents the financial terms of the payout — amount, timing, and conditions. A separation and release agreement is broader: it covers the full set of post-separation obligations including confidentiality, non-disparagement, property return, benefits continuation, and the release of claims. Employers dealing with any litigation risk should use a full separation and release agreement rather than a simple severance letter.

Many separation agreements include mutual releases and mutual non-disparagement clauses, meaning the employer also releases claims against the employee and agrees not to make negative statements about them. Mutual language is standard for negotiated executive departures and is increasingly common for all separations. A one-sided release — where only the employee releases claims — is legally valid but can be harder to negotiate and may signal bad faith to a court reviewing the agreement's overall fairness.

For straightforward separations involving employees under 40 with standard severance, a high-quality template is usually a sound starting point. Legal review is strongly recommended — and practically essential — when the employee is aged 40 or older (ADEA/OWBPA compliance), when the separation involves potential discrimination or wage claims, when the employee is an executive with equity or enhanced severance, or when the employee works in a jurisdiction with complex employment law such as California, Ontario, or the UK. A 1–2 hour attorney review typically costs $300–$600 and is substantially less expensive than defending even a weak employment claim.

An employer cannot force an employee to sign a release of claims. If the employee refuses, the employer is not obligated to pay severance unless a prior employment contract, policy, or statutory scheme independently requires it. The employment separation still proceeds — the employer simply loses the benefit of the release and retains full litigation exposure. In that scenario, consulting employment counsel before the separation meeting is advisable to assess the specific risk profile.