Termination Settlement Agreement for Hong Kong

Termination Settlement Agreement Template for Hong Kong

A comprehensive legal document governed by Hong Kong law that formalizes the terms and conditions of an employment termination between an employer and employee. This agreement sets out the final settlement terms, including payments, benefits, and mutual obligations, while providing legal protection for both parties through carefully drafted releases and waivers. It addresses all statutory requirements under Hong Kong employment law, including handling of statutory entitlements, taxation considerations, and any post-termination obligations. The document serves as a full and final settlement of all claims arising from the employment relationship.

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What is a Termination Settlement Agreement?

The Termination Settlement Agreement is a crucial document used when an employment relationship is being terminated by mutual agreement or as part of a negotiated exit. It is particularly relevant in Hong Kong's dynamic business environment where both employers and employees seek clarity and finality in employment separations. The agreement comprehensively addresses all aspects of the termination, including financial settlements, statutory obligations, tax implications, and continuing obligations. It serves as a risk management tool by including appropriate releases and waivers while ensuring compliance with Hong Kong employment laws. This document is essential for protecting both parties' interests and preventing future disputes by clearly documenting all agreed terms of the separation.

What sections should be included in a Termination Settlement Agreement?

1. Parties: Identification of the employer and employee parties to the agreement

2. Background: Context of the employment relationship and reason for termination settlement

3. Definitions: Definitions of key terms used throughout the agreement

4. Termination Date: Specification of the employment termination date and final working day

5. Settlement Payments: Details of all payments to be made, including salary, severance, and other entitlements

6. Tax Treatment: Clarification of tax handling for settlement payments

7. Release and Waiver: Mutual release of claims and waiver of rights

8. Confidentiality: Obligations regarding confidentiality of the agreement and company information

9. Return of Property: Requirements for returning company property and documents

10. Post-Termination Obligations: Continuing obligations such as non-disparagement and cooperation

11. Entire Agreement: Clause confirming this agreement supersedes all previous agreements regarding the subject matter

12. Governing Law: Specification of Hong Kong law as governing law

13. Execution: Signature blocks and execution requirements

What sections are optional to include in a Termination Settlement Agreement?

1. Outstanding Claims: Section addressing any existing disputes or potential claims, used when there are known issues to be resolved

2. Intellectual Property Rights: Provisions regarding ownership and transfer of IP rights, used when IP was created during employment

3. Reference: Terms regarding the provision of employment references, used when agreed as part of settlement

4. Garden Leave: Provisions for garden leave period if applicable between notice and termination date

5. International Provisions: Additional jurisdictional provisions for employees with international employment aspects

6. Non-Compete and Non-Solicit: Post-employment restrictions, used when reasonable restrictions are necessary to protect business interests

7. Legal Advice: Acknowledgment of independent legal advice, used when required for enforceability

8. Medical Insurance: Provisions regarding continuation or termination of medical benefits, used when relevant

9. Share Options/Awards: Treatment of outstanding share options or awards, used when employee has equity arrangements

What schedules should be included in a Termination Settlement Agreement?

1. Schedule 1 - Payment Calculation: Detailed breakdown of all settlement payments and calculations

2. Schedule 2 - Company Property: List of company property to be returned

3. Schedule 3 - Outstanding Benefits: Details of any pro-rated bonuses, unused leave, or other benefits

4. Schedule 4 - Continuing Obligations: List of specific obligations that continue post-termination

5. Schedule 5 - Form of Announcement: Agreed form of internal/external announcement regarding the departure

6. Appendix A - Release Form: Form of release to be signed upon receipt of settlement payment

7. Appendix B - Certificate of Completion: Form confirming completion of handover and return of property

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Hong Kong

Publisher

Genie AI

Document Type

Confirmation Letter

Sector

Sales

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Financial Services

Technology

Manufacturing

Retail

Professional Services

Healthcare

Education

Construction

Real Estate

Telecommunications

Media & Entertainment

Energy

Transportation & Logistics

Hospitality

Consumer Goods

Relevant Teams

Human Resources

Legal

Finance

Compliance

Operations

Senior Management

Corporate Secretarial

Risk Management

Payroll

Employee Relations

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Managing Director

Senior Manager

Department Head

Project Manager

Sales Executive

Software Engineer

Administrative Assistant

Operations Manager

HR Director

Legal Counsel

Finance Manager

Marketing Manager

Account Manager

Research Analyst

Technical Specialist

Customer Service Representative

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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