Severance Agreement Template for United States

A Severance Agreement outlines the final terms and benefits when an employer and employee part ways in the Philippines. It spells out the compensation package, including salary, unused leave credits, and other benefits the worker will receive after their employment ends. Under Philippine labor laws, this legal contract also typically includes provisions about confidentiality and non-compete clauses.

Beyond just detailing the severance pay, these agreements often protect both parties by preventing future disputes. They usually contain a release clause where employees agree not to file claims against their former employer in exchange for the severance benefits. This makes them valuable tools for companies going through reorganizations or implementing redundancy programs under DOLE guidelines.

Consider using a Severance Agreement when ending employment relationships on good terms in the Philippines, especially during company restructuring, redundancies, or voluntary separation programs. This document becomes essential when offering separation packages beyond the mandatory requirements of Philippine labor laws, or when dealing with key employees who had access to sensitive company information.

The timing is crucial - introduce the Severance Agreement before the actual separation date to allow proper negotiation and review. It's particularly valuable when managing mass layoffs, protecting trade secrets, or preventing potential labor disputes. Many companies use these agreements during mergers and acquisitions or when implementing early retirement programs to ensure smooth transitions.

• Severance Contract: A comprehensive legal document detailing all separation terms and conditions, typically used for senior executives or complex separations.
• Employee Severance Agreement: Standard template for rank-and-file employees, focusing on basic separation benefits and straightforward terms.
• Severance Letter: A simpler, less formal version that outlines basic separation terms, often used for amicable departures.
• Layoff Separation Agreement: Specifically designed for redundancy situations, including DOLE-compliant provisions for mass layoffs.
• Laid Off Separation Agreement: Tailored for individual terminations due to business circumstances, with emphasis on mutual release clauses.

• Employers/Companies: Initiate and draft the Severance Agreement, typically through their HR department or legal team, ensuring compliance with Philippine labor laws.
• Departing Employees: Review, negotiate, and sign the agreement, often with legal counsel's guidance before accepting the terms.
• HR Managers: Coordinate the separation process, prepare initial drafts, and ensure all benefits align with company policies.
• Corporate Lawyers: Review and refine agreement terms, ensuring protection for both parties under DOLE regulations.
• Labor Unions: May participate in negotiations when collective bargaining agreements are involved.
• DOLE Representatives: Monitor compliance with labor laws, especially during mass layoffs or redundancy programs.

• Employee Details: Gather complete employment history, position, salary, and benefits information for accurate calculations.
• Separation Terms: Document the reason for separation, last working day, and computation of final pay including 13th month and leave credits.
• Benefits Package: Calculate severance pay following Philippine labor laws, plus any additional company-specific benefits.
• Company Assets: List all company property to be returned, including equipment, access cards, and confidential documents.
• Legal Requirements: Check DOLE guidelines for minimum requirements and any CBA provisions that may apply.
• Release Clauses: Define specific claims being waived and any post-employment obligations like non-compete agreements.

• Identification Details: Full names and addresses of both employer and employee, company registration, and employee position.
• Separation Terms: Clear statement of termination date, reason for separation, and final working day arrangements.
• Financial Package: Detailed breakdown of severance pay, benefits, and computation method following Philippine labor standards.
• Release Clause: Specific terms releasing employer from future claims, written in Filipino/English for clarity.
• Confidentiality Provisions: Terms protecting company trade secrets and proprietary information.
• Legal Compliance: Reference to relevant DOLE regulations and Labor Code provisions.
• Voluntary Agreement: Statement confirming employee's understanding and voluntary acceptance.
• Signature Block: Spaces for dated signatures, witnesses, and notarization if required.

A Severance Agreement differs significantly from a Business Acquisition Agreement in several key aspects, though both are important during company transitions. While severance agreements focus on ending individual employment relationships, business acquisition agreements deal with the broader transfer of business ownership and assets.

• Scope and Purpose: Severance agreements handle employee separation benefits and releases, while business acquisition agreements cover entire business transfers, including assets, liabilities, and operations.
• Parties Involved: Severance agreements are between employer and employee, while acquisition agreements involve business entities as buyer and seller.
• Legal Requirements: Severance agreements must comply with DOLE regulations and labor laws, while acquisition agreements follow SEC and corporate law requirements.
• Duration and Effect: Severance agreements typically have one-time effects at employment termination, while acquisition agreements create ongoing obligations and relationships between business entities.