Mutual Severance Agreement for Singapore

Mutual Severance Agreement Template for Singapore

A Mutual Severance Agreement under Singapore law is a legally binding document that formalizes the termination of employment by mutual consent between an employer and employee. The agreement outlines the terms of separation, including severance payments, benefits, confidentiality obligations, and mutual releases of claims. It ensures compliance with Singapore's Employment Act and related legislation while providing clarity and protection for both parties.

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What is a Mutual Severance Agreement?

The Mutual Severance Agreement is utilized when both employer and employee in Singapore agree to terminate their employment relationship amicably. This document is particularly relevant during corporate restructuring, voluntary departures, or when both parties seek a clean break with clearly defined terms. The agreement must comply with Singapore's Employment Act, Central Provident Fund regulations, and other relevant legislation. It typically includes provisions for severance payment, confidentiality, non-competition, release of claims, and ongoing obligations. The document serves to protect both parties' interests and minimize the risk of future disputes.

What sections should be included in a Mutual Severance Agreement?

1. Parties: Identification of employer and employee, including full legal names and registered addresses

2. Background: Brief history of employment relationship and reason for mutual severance

3. Definitions: Key terms used tHRoughout the agreement including 'Termination Date', 'Severance Payment', etc.

4. Termination of Employment: Formal statement of employment termination and effective date

5. Severance Payment: Details of severance package, payment schedule, and tax implications

6. Release of Claims: Mutual release of legal claims between parties

7. Confidentiality: Ongoing obligations regarding company confidential information

What sections are optional to include in a Mutual Severance Agreement?

1. Non-Competition: Restrictions on future employment - recommended for senior employees or those with access to sensitive information

2. Non-Solicitation: Restrictions on approaching company clients or employees - recommended for client-facing roles or management positions

3. References: Agreement on nature and content of references - include when specifically negotiated by employee

4. Outplacement Services: Provision of career transition support - typically included for senior roles or as part of enhanced packages

5. Continuation of Benefits: Extension of medical or other benefits post-termination - include when agreed as part of severance package

What schedules should be included in a Mutual Severance Agreement?

1. Schedule 1 - Severance Payment Calculation: Detailed breakdown of severance payment components

2. Schedule 2 - Company Property: List of items to be returned to employer

3. Schedule 3 - Outstanding Benefits: List of accrued benefits and their treatment

4. Appendix A - Reference Letter Template: Agreed format and content of reference letter if applicable

5. Appendix B - CPF Treatment: Details of CPF contributions and calculations

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

Cost

Free to use

Relevant legal definitions

Clauses

Relevant Industries

Financial Services
Technology
Manufacturing
Healthcare
Retail
Professional Services
Education
Construction
Telecommunications
Hospitality

Relevant Teams

Human Resources
Legal
Finance
Operations
Sales
Information Technology
Administration
Research & Development
Marketing
Customer Service

Relevant Roles

Chief Executive Officer
Chief Financial Officer
Department Head
Senior Manager
Manager
Executive
Professional Staff
Administrative Staff
Technical Specialist
Sales Representative

Industries

Employment Act (Chapter 91): Primary legislation governing employment relationships in Singapore, covering termination procedures, salary payments, benefits, and notice period requirements

Industrial Relations Act (Chapter 136): Legislation governing union-related matters, including provisions for unionized employees and collective agreement considerations

Income Tax Act (Chapter 134): Legislation governing tax implications of severance payments and treatment of different settlement components

Retirement and Re-employment Act: Legislation protecting older workers and governing retirement-related provisions, particularly relevant for employees near retirement age

MOM Tripartite Guidelines: Official guidelines covering fair employment practices, excess manpower management, and workplace harassment

Personal Data Protection Act 2012: Legislation governing the handling of personal data and confidentiality requirements in employment relationships

Central Provident Fund Act: Legislation governing mandatory social security savings system, including CPF contributions and obligations in severance situations

Work Injury Compensation Act: Legislation covering workplace injury claims and their consideration in severance agreements

Limitation Act: Legislation setting time limits for various types of claims and releases in employment matters

Common Law Contract Principles: Legal principles ensuring agreement validity, including consideration requirements, binding nature, and clarity of terms

Non-Competition Provisions: Contractual clauses restricting post-employment competition, subject to reasonableness requirements under Singapore law

Confidentiality Obligations: Provisions protecting company confidential information and trade secrets post-employment

Release of Claims: Provisions waiving employee rights to future claims against the employer, subject to legal limitations

Company Property Return: Requirements for the return of company assets, documents, and intellectual property

Reference Letters: Terms regarding the provision of employment references and their content

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What is a Mutual Severance Agreement?

What sections should be included in a Mutual Severance Agreement?

What sections are optional to include in a Mutual Severance Agreement?

What schedules should be included in a Mutual Severance Agreement?

Authors

Alex Denne

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