What is a severance agreement?

A severance agreement is a legally binding contract between an employer and an employee that outlines the terms of an employee's departure from the company, including any compensation or benefits the employee will receive.

What is a non-solicitation clause?

A non-solicitation clause is a provision in a severance agreement that restricts former employees from soliciting clients or employees of the company for a specified period after leaving.

Why is the return of company property important in severance agreements?

The return of company property clause ensures that employees return all company-owned items, such as laptops, documents, and keys, to protect the company's assets and confidential information.

What does the governing law section of a severance agreement entail?

The governing law section specifies which jurisdiction's laws will apply to the interpretation and enforcement of the severance agreement, providing clarity on legal procedures if disputes arise.

Can an employee negotiate the terms of a severance agreement?

Yes, an employee can negotiate the terms of a severance agreement, including clauses related to non-solicitation, return of company property, and governing law, to better suit their needs and circumstances.

10 Common Clauses in Severance Agreements You Should KnowSetting clear priorities can also assist in making concessions during the negotiation. If you are open to compromise on certain aspects, it is beneficial to note what alternative benefits you would find acceptable. This flexibility can enhance your bargaining power while ensuring that your primary concerns remain at the forefront of discussions. Engaging in this methodical approach will empower you and your solicitor as you navigate the negotiation process.

NonSolicitation Clause

A non-solicitation clause typically prevents former employees from attempting to engage with the company’s clients or employees after their departure. This clause aims to protect the business's interests by ensuring that ex-employees do not leverage their personal connections to the detriment of the company. It helps maintain client relationships and safeguard trade secrets, promoting a stable environment for the existing workforce.

Violating this clause may result in significant repercussions, including legal action from the company. The specific terms of non-solicitation clauses can vary widely, often outlining the duration of the restriction and the geographical scope. Potential employees should carefully review these terms to understand their obligations and any limitations that may apply following their employment.

Limitations on Contacting Clients and EmployeesPrivacy Policy

Severance agreements often include specific provisions that restrict ex-employees from contacting clients or engaging with former colleagues for a defined period. These limitations serve to protect the company’s business interests and client relationships, ensuring that sensitive information and trade secrets remain confidential. Such clauses can vary in detail, including stipulations on the duration of the restrictions and the specific individuals or groups that cannot be contacted.

The significance of these restrictions extends beyond mere compliance; they safeguard invaluable business assets. Companies invest considerable effort and resources in developing client relationships, and any attempt by a former employee to solicit business from these clients can disrupt ongoing partnerships. Similarly, limitations on contacting former colleagues prevent the disruption of team dynamics and maintain the integrity of the company's internal operations.

Return of Company Property

Employees are often required to return any company property upon termination of their employment. This can include a range of items such as laptops, mobile phones, documents, keys, and identification badges. The agreement should clearly outline what needs to be returned and the timeframe for doing so. Failure to comply with these obligations can result in financial penalties or legal action.

The return process may involve a formal procedure to ensure that all items are accounted for. Sometimes companies may require an employee to participate in an exit interview to confirm the return of assets. Reinforcing this obligation helps to protect the company's intellectual property and confidential information. It also serves to maintain a professional relationship between the departing employee and the employer.

Obligations for Exemployees

Ex-employees are typically required to fulfil certain obligations as outlined in their severance agreements. These responsibilities often include maintaining confidentiality regarding sensitive information acquired during their employment. Such clauses help protect company trade secrets and proprietary data from potential leaks. Failure to adhere to these obligations can lead to legal repercussions, affecting the individual's ability to freely discuss their former job or share insights gained from their experience.

10 Common Clauses in Severance Agreements You Should Know

NonSolicitation Clause

Limitations on Contacting Clients and EmployeesPrivacy Policy

Return of Company Property

Obligations for Exemployees

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