How to Review a Severance Agreement: A Clause-by-Clause Checklist

How to review a severance agreement When an employer hands you a severance agreement, the money on offer is only part of the picture. You are usually being asked to give up the right to bring claims, so the real question is whether the deal is fair for what you give up, and whether the statutory amounts you are owed by law are being paid in full on top. Work through the clauses below, mark each one, and treat anything flagged as a red flag as something to question before you sign. This is general information, not legal advice. Statutory entitlements and the rules on releasing claims vary by jurisdiction, so take advice on anything significant before signing. ## First, check the floor Before you weigh the offer, confirm the amounts you are owed regardless of any agreement are being paid in full. In India that usually means unpaid salary, notice pay or pay in lieu, accrued leave encashment, provident fund, and gratuity where your service qualifies. A severance payment should be extra, on top of these, not a repackaging of money you were already owed. If the offer simply pays you what you were entitled to anyway and calls it severance, that is a red flag. ## The clause-by-clause checklist 1. Severance payment. How much, and when?

• Green: a clear figure, a firm payment date, and a sensible formula if one is used.
• Red flag: a vague amount, a payment delayed for months, or severance that merely repackages your statutory dues. 2. Statutory dues. Are they separate and in full?
• Green: a clause confirming all legal entitlements are paid in accordance with law, separately from severance.
• Red flag: silence on statutory dues, or wording that bundles them into the severance figure. 3. Release of claims. What exactly are you giving up?
• Green: a release limited to claims that can lawfully be waived, with a carve-out for those that cannot and for accrued statutory dues.
• Red flag: a sweeping release that appears to sign away unwaivable rights or future claims you cannot yet know about. 4. Revocation and review period. Do you have time to think, and in the US to revoke?
• Green: a reasonable period to review and, where required, to revoke, plus a written suggestion to seek advice.
• Red flag: pressure to sign on the spot, or no revocation window where the law requires one. 5. Confidentiality. What must you keep quiet?
• Green: a clause protecting genuine company secrets, with the terms of the deal confidential only so far as lawful.
• Red flag: a gag so wide you could not discuss the agreement with your own adviser or family. 6. Non-disparagement. Does it run both ways?
• Green: mutual non-disparagement, binding the employer as well as you, with a lawful-disclosure carve-out.
• Red flag: a one-sided clause binding only you, or one that appears to stop you reporting wrongdoing. 7. Reference. What will the employer say about you?
• Green: a commitment to a factual reference confirming role and dates.
• Red flag: no reference clause, or a right for the employer to say whatever it wishes. 8. Benefits continuation. Does cover continue, and until when?
• Green: a clear end date for insurance or other benefits, and any continued support spelled out.
• Red flag: cover that ends immediately with no notice, leaving a gap. 9. Restrictive covenants. Are new restrictions being added?
• Green: no new non-compete, or one that is narrow and supported by this payment.
• Red flag: a broad non-compete slipped into the exit papers, whose enforceability varies by jurisdiction. 10. Tax treatment. Is it clear how the payment is taxed?
• Green: the agreement notes that lawful deductions or tax apply and who bears them.
• Red flag: silence that leaves you with an unexpected tax bill. ## Red flags that should stop you - Severance that is really just your statutory dues with a new label.
• A release that reaches claims you cannot lawfully waive.
• Pressure to sign immediately, with no time to take advice.
• A confidentiality or non-disparagement clause that appears to gag lawful reporting.
• A new, broad non-compete added at exit.
• No clarity on when benefits end or how the payment is taxed. ## A quick scoring guide | Clause | Fair | Needs negotiation | |--------|------|-------------------| | Severance amount | Clear, extra, firm date | Vague or repackaged dues | | Statutory dues | Separate and in full | Bundled or silent | | Release | Limited to waivable claims | Sweeping | | Time to sign | Reasonable, advised | On the spot | | Non-disparagement | Mutual | One-sided | | Reference | Factual, committed | None | If several rows fall on the right, the deal is weighted against you and worth pushing back on before you sign. ## Get the key points in writing Verbal promises made during an exit, about a reference, a payment date, or continued benefits, are worth little once you have signed a release. If something matters to you, make sure it appears in the agreement itself rather than in an email or a conversation. Ask for the payment date and amount, the end date of any benefit, and the wording of your reference to be stated in the document. If the employer is unwilling to put a promise in writing, treat that as a signal about how reliable the promise is. The release you give is final, so the terms you receive in return should be just as firm. ## Where a contract workspace helps Checking a severance offer against the statutory floor, reading the release for what it really waives, and tracking the payment and benefit dates is careful work, and more so for an HR or legal team handling many exits. That is the work an AI contract workspace can carry. Instead of marking up each agreement by hand, you open the document and see every clause marked favourable, neutral, or unfavourable to your company, overbroad releases and missing carve-outs flagged, and the key dates tracked. Adira is one workspace built around that idea, keeping document intelligence, per-clause risk, and date tracking together and tuned to how your company contracts. The checklist above works on its own; a workspace just makes the review and the tracking less manual. Confirm the statutory floor, weigh the release against the extra on offer, and never sign under pressure before you have taken advice.