Separation Agreement Template for India

A Separation Agreement is a legally binding contract between an employer and departing employee that formally ends their working relationship. In the Indian context, it outlines key terms like final settlement, confidentiality obligations, and any post-employment restrictions, while protecting both parties' interests during the transition.

Beyond standard resignation formalities, these agreements often include specifics about gratuity payments under the Payment of Gratuity Act, handling of provident fund accounts, and non-compete clauses enforceable under Indian Contract Law. They're especially common in IT, financial services, and other sectors where protecting company information is crucial.

Use a Separation Agreement when parting ways with key employees, especially those who've had access to sensitive business information or client relationships. This document becomes essential in India's competitive sectors like IT, pharmaceuticals, and financial services, where protecting trade secrets and preventing unfair competition are top priorities.

The agreement proves particularly valuable during sensitive exits, acquisitions, leadership changes, or when offering enhanced severance packages. It helps prevent future disputes by clearly documenting mutual obligations, including final settlements under Indian labor laws, non-compete terms, and confidentiality requirements. Many companies pair it with structured exit interviews for senior positions.

• Legal Separation Contract: Standard agreement covering basic termination terms, final settlements, and confidentiality obligations
• Contract Separation Agreement: Specialized version for contract employees, addressing project handovers and temporary engagement terms
• Separation Settlement Agreement: Focuses on detailed financial settlements, including gratuity, bonus, and stock options
• Separation And Property Settlement Agreement: Comprehensive version covering company property return, intellectual property rights, and asset transfers

• HR Directors and Managers: Draft and customize Separation Agreements, ensure compliance with Indian labor laws, and manage the exit process
• Legal Teams: Review terms, validate enforceability under Indian Contract Act, and ensure protection of company interests
• Departing Employees: Review and negotiate terms, particularly regarding final settlements, non-compete clauses, and confidentiality obligations
• Company Directors: Approve agreements for senior executives, determine severance packages, and protect strategic interests
• External Legal Counsel: Provide specialized advice on complex separations, industry-specific regulations, and dispute prevention

• Employee Details: Gather full name, designation, joining date, and last working day
• Compensation Information: Calculate final settlement including salary, gratuity, bonus, and leave encashment
• Company Assets: List all equipment, access cards, and documents to be returned
• Non-compete Terms: Define reasonable restrictions based on role and industry standards
• Legal Requirements: Check compliance with state-specific labor laws and mandatory notice periods
• Template Selection: Our platform generates custom Separation Agreements that include all mandatory elements under Indian law
• Internal Approvals: Get sign-off from HR, finance, and department heads before finalizing

• Party Details: Full legal names, designations, and company information with registered address
• Termination Terms: Clear statement of employment end date and mutual agreement to separate
• Financial Settlement: Detailed breakdown of final payment including salary, benefits, and statutory dues
• Confidentiality Clause: Specific obligations regarding trade secrets and proprietary information
• Non-compete Provisions: Geographic and time-bound restrictions as per Indian Contract Act
• Legal Compliance: References to relevant labor laws and statutory requirements
• Dispute Resolution: Jurisdiction clause and arbitration process under Indian law
• Signature Block: Space for both parties with witness provisions

While both documents handle business transitions, a Separation Agreement differs significantly from a Business Acquisition Agreement. Understanding these differences helps you choose the right document for your situation.

• Primary Purpose: Separation Agreements manage employee exits and protect company interests, while Business Acquisition Agreements facilitate the purchase and transfer of entire business operations
• Scope of Coverage: Separation Agreements focus on individual employment termination, confidentiality, and non-compete terms; Business Acquisition Agreements cover asset transfers, liabilities, and operational continuity
• Key Parties: Separation Agreements involve employer and departing employee; Business Acquisition Agreements involve buyer, seller, and often shareholders
• Legal Framework: Separation Agreements primarily fall under Indian labor laws, while Business Acquisition Agreements operate under corporate and commercial laws