Severance Agreement Template and How to Draft One (2026)

What a severance agreement does A severance agreement (also called a separation agreement) records the terms on which an employer and a departing employee part ways. The employer usually offers a payment or benefits above what is strictly owed, and in exchange the employee agrees to a release of claims and often to confidentiality and non-disparagement. It should sit on top of, not replace, the statutory dues the employee is entitled to by law. A quick note on what cannot be bargained away. In India a departing employee is owed their statutory dues regardless of any agreement: unpaid salary, notice pay or pay in lieu, accrued leave encashment, provident fund, and gratuity where the service qualifies. A severance payment is usually extra, on top of these. In the United States a release of age claims must follow specific rules (a consideration period to review and a short period to revoke), and some claims cannot be waived at all. So a severance agreement settles the extra, not the floor set by law. This is general information, not legal advice. Statutory entitlements and the rules on releasing claims vary by jurisdiction, so have a qualified professional confirm the position before you sign or send one. ## The template ```

SEVERANCE AND SEPARATION AGREEMENT This Agreement is made on [date] between: (1) [Employer legal name], of [address] (the "Company"); and (2) [Employee name], of [address] (the "Employee"). 1. END OF EMPLOYMENT The Employee's employment ends on [date] (the "Separation Date"). The parties confirm the reason recorded is [resignation / redundancy / termination by mutual consent]. 2. FINAL PAY AND STATUTORY DUES The Company shall pay all amounts owed up to the Separation Date, including salary, [notice pay / pay in lieu of notice], accrued leave encashment, and any statutory amounts such as provident fund and gratuity where applicable, in accordance with law. 3. SEVERANCE PAYMENT In addition to clause 2, and in exchange for the Employee's promises in this Agreement, the Company shall pay the Employee [amount] (the "Severance Payment"), less lawful deductions, on [date / within __ days of the Separation Date]. 4. BENEFITS [State any continued benefits, e.g. insurance cover to a stated date, outplacement support, or retention of a device.] 5. RELEASE OF CLAIMS In exchange for the Severance Payment, the Employee releases the Company from claims arising out of the employment or its ending, to the extent permitted by law. This release does not cover any claim or right that cannot lawfully be waived, nor accrued statutory dues under clause 2. 6. RETURN OF PROPERTY By the Separation Date the Employee shall return all Company property and confidential information, including documents, devices, and copies. 7. CONFIDENTIALITY The Employee shall keep the Company's confidential information secret. [Optional: the terms of this Agreement are confidential, save as required by law or to the Employee's advisers and immediate family.] 8. NON-DISPARAGEMENT Neither party shall make disparaging statements about the other. Nothing in this clause prevents a disclosure required by law or a report of wrongdoing to a competent authority. 9. REFERENCES The Company shall, on request, provide a factual reference confirming [role, dates of employment]. 10. NO ADMISSION This Agreement is not an admission of liability by either party. 11. GOVERNING LAW This Agreement is governed by the laws of [jurisdiction], and the courts of [place] have jurisdiction. Signed for the Company: ____________ Signed by the Employee: ____________ Name / title / date Name / date

2. **Severance amount (clause 3).** State a clear figure, when it is paid, and that it is conditional on the promises in the agreement. Many employers use a formula such as a number of weeks or months per year of service.
3. **Release of claims (clause 5).** Keep the carve-out for claims that cannot be waived. A release that appears to sign away unwaivable rights or statutory dues can be unenforceable.
4. **Confidentiality and non-disparagement (clauses 7 to 8).** Keep the law and wrongdoing-reporting carve-out in clause 8. An agreement that seems to gag lawful reporting is a serious risk and can be unlawful in some places.
5. **References (clause 9).** A factual reference is usual. Promising a glowing reference is better avoided.
6. **US age claims.** If the employee is older and United States law applies, build in the review and revocation periods required to release age-discrimination claims, and advise the employee in writing to consult a lawyer.
7. **Governing law (clause 11).** Use the law of the place where the employee worked, because local protections usually apply regardless. ## What a fair severance agreement includes | Element | Why it matters |
|---------|----------------|
| Statutory dues paid in full | They cannot be bargained away |
| Clear severance figure and date | Avoids disputes over the extra |
| Release limited to waivable claims | Keeps the release enforceable |
| Lawful-disclosure carve-out | Preserves the right to report wrongdoing |
| Mutual non-disparagement | Protects both sides, not just the employer |
| Factual reference | Helps the employee move on | ## Where a contract workspace helps Drafting a fair separation for each departure, confirming the statutory dues are right, keeping the signed copy straight, and tracking any payment or benefit date is careful, repetitive work. That is the work an AI contract workspace can carry. Instead of reworking a template each time, you draft from a short brief, see each clause marked favourable, neutral, or unfavourable to your company, adjust the release or notice terms in plain English, and let the workspace track payment dates and obligations across the team. [Adira](https://adiralaw.com) is one such workspace, keeping drafting, per-clause risk, e-signing, version history, and date tracking together and tuned to how your company contracts. The template above works on its own; a workspace just makes the drafting and the remembering less manual. Pay the statutory floor in full, make the extra and the release clear, and keep the lawful-disclosure carve-out in every version.