Severance Agreement Template for Pakistan

A Severance Agreement is a legally binding contract between an employer and a departing employee that outlines the final terms of their separation. In Pakistan's business landscape, these agreements typically spell out the compensation package, benefits continuation, and any special conditions that come with ending the employment relationship.

Under Pakistani labor laws, severance agreements help protect both parties by clearly defining important details like final settlement amounts, confidentiality obligations, and restrictions on future employment. They're especially common in corporate sectors and multinational companies, where they serve as a formal way to document mutual understanding and prevent future disputes about termination terms.

Use a Severance Agreement when ending an employment relationship amicably and need to create clear terms for the separation. This is especially important in Pakistan when laying off senior executives, conducting corporate restructuring, or offering early retirement packages. The agreement becomes crucial when you need to protect confidential information or prevent potential legal disputes.

Consider implementing it during voluntary resignations with settlement packages, mass layoffs under Pakistani labor laws, or when terminating employees who have access to sensitive company data. It's particularly valuable when offering additional benefits beyond standard statutory requirements, or when seeking mutual releases from future claims.

• Severance Offer Letter: Initial proposal document outlining basic severance terms and compensation package, commonly used for individual terminations and voluntary departures. Serves as a starting point for negotiations.
• Job Separation Agreement: Comprehensive agreement with detailed terms covering confidentiality, non-compete clauses, and mutual releases. Typically used for executive departures or complex separations where legal protection is crucial.

• Human Resources Departments: Draft initial agreements, manage negotiations, and ensure compliance with Pakistan's labor laws and company policies
• Corporate Legal Teams: Review and finalize Severance Agreements, ensuring legal enforceability and protection of company interests
• Senior Executives: Often both authorize agreements for others and may be subject to specialized versions themselves with enhanced benefits
• Departing Employees: Review, negotiate, and ultimately sign the agreement, becoming bound by its terms and conditions
• Labor Law Consultants: Provide guidance on local regulations and help structure agreements for different employment levels

• Employee Details: Gather complete employment history, current salary, benefits, and position details
• Separation Terms: Calculate severance pay, notice period, and any additional benefits per Pakistani labor laws
• Company Assets: List all company property to be returned, including devices, documents, and access credentials
• Legal Requirements: Review applicable labor laws and company policies to ensure compliance
• Confidentiality Scope: Define specific trade secrets and sensitive information to protect
• Payment Schedule: Outline the timing and method of severance payments
• Final Review: Use our platform to generate a legally sound agreement that includes all mandatory elements

• Party Identification: Full legal names and details of both employer and employee
• Severance Amount: Clear calculation method and payment schedule as per Pakistani labor standards
• Release Clause: Mutual release from future claims and legal obligations
• Confidentiality Terms: Specific provisions protecting company information and trade secrets
• Non-Compete Provisions: Reasonable restrictions under Pakistani competition laws
• Benefits Continuation: Details of extended medical coverage or other benefits
• Return of Property: List of company assets to be returned
• Governing Law: Clear statement of Pakistani jurisdiction and applicable labor laws

A Severance Agreement differs significantly from an Assignment Agreement in both purpose and scope within Pakistan's legal framework. While both are employment-related documents, they serve distinct functions in managing workplace relationships.

• Primary Purpose: Severance Agreements handle employment termination and related benefits, while Assignment Agreements focus on transferring rights, duties, or intellectual property between parties
• Timing of Use: Severance Agreements come into play at the end of employment, whereas Assignment Agreements are typically executed during ongoing employment or business relationships
• Legal Obligations: Severance Agreements include release of claims and final settlement terms, while Assignment Agreements establish new ongoing responsibilities and ownership rights
• Financial Terms: Severance focuses on termination payments and benefits, while Assignment deals with compensation for transferred rights or duties