Employment
Free Severance Agreement Template
A severance agreement and general release setting out the payment, benefits, release of claims and post-employment terms when a job ends.
A severance agreement is a contract where an employer pays a departing employee money or benefits in exchange for a release of legal claims. Employees aged 40 or older must generally get 21 days to consider it and 7 days to revoke it.
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Template
SEVERANCE AGREEMENT AND GENERAL RELEASE
This Severance Agreement and General Release ("Agreement") is made between [EMPLOYER NAME] ("Company") and [EMPLOYEE NAME] ("Employee").
1. SEPARATION. Employee's employment ends on [SEPARATION DATE] ("Separation Date"). The Company will pay all wages earned through the Separation Date and any accrued, unused vacation as required by law, whether or not Employee signs this Agreement.
2. SEVERANCE PAY. If Employee signs and does not revoke this Agreement, the Company will pay Employee [AMOUNT], less applicable withholdings, [in a lump sum within [NUMBER] days after the Effective Date / in equal installments on regular paydays over [NUMBER] weeks].
3. BENEFITS. If Employee timely elects continuation coverage under COBRA, the Company will pay [the full / [PERCENT]% of the] monthly premium for [NUMBER] months or until Employee becomes eligible for other group coverage, whichever is earlier.
4. EQUITY. Treatment of any equity awards is governed by the applicable plan and award agreements, except that [DESCRIBE ANY ACCELERATION OR EXTENDED EXERCISE PERIOD, OR "no changes"].
5. GENERAL RELEASE. In exchange for the benefits above, Employee releases the Company and its affiliates, officers, directors and employees from all claims arising out of Employee's employment or its termination, known or unknown, up to the date Employee signs, including claims under Title VII, the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act and applicable state law, to the extent permitted by law.
6. CLAIMS NOT RELEASED. This release does not waive: (a) rights to vested benefits; (b) unemployment or workers' compensation benefits; (c) claims that cannot be waived by law; (d) rights under this Agreement; or (e) claims arising after Employee signs.
7. PROTECTED RIGHTS. Nothing in this Agreement prevents Employee from filing a charge with, communicating with, or participating in an investigation by the EEOC, NLRB, SEC, OSHA or any other government agency, or from receiving an award from a government agency for information provided. Nothing prevents Employee from discussing or disclosing information about unlawful acts in the workplace, such as harassment, discrimination or any other conduct Employee has reason to believe is unlawful.
8. REVIEW AND REVOCATION (EMPLOYEES AGE 40 OR OLDER). Employee is advised to consult an attorney before signing. Employee has [21] days to consider this Agreement [45 days if part of a group termination program] and may revoke it within 7 days after signing by written notice to [NAME AND EMAIL]. This Agreement becomes effective on the eighth day after Employee signs without revoking ("Effective Date").
9. RETURN OF PROPERTY. By the Separation Date, Employee will return all Company property, documents and data.
10. CONFIDENTIALITY OF AGREEMENT. [Optional: Employee will keep the terms of this Agreement confidential, except as permitted in Section 7 and for disclosure to Employee's spouse, attorney, tax adviser or as required by law.]
11. NON-DISPARAGEMENT. [Optional, mutual: Employee will not make false and disparaging statements about the Company, and the Company will instruct [NAMED EXECUTIVES] not to make false and disparaging statements about Employee.] This section does not limit the rights in Section 7.
12. REFERENCES. The Company will respond to reference requests by confirming only Employee's dates of employment and last position [or: provide the agreed reference in Exhibit A].
13. NO ADMISSION. This Agreement is not an admission of wrongdoing by either party.
14. ENTIRE AGREEMENT; GOVERNING LAW. This Agreement is the entire agreement on its subject and is governed by the laws of [STATE]. Any continuing confidentiality or invention assignment obligations Employee previously agreed to remain in effect [except: LIST ANY EXCEPTIONS].
GENERAL PROVISIONS
(a) Notices. Notices must be in writing and sent to the addresses or emails above (or as later updated by notice). Email notice is effective when sent, unless the sender receives a delivery failure message.
(b) Entire agreement. This agreement, with any schedules and exhibits, is the entire agreement between the parties on its subject and replaces all prior discussions and agreements on that subject.
(c) Amendments and waivers. Changes must be in writing and signed by both parties. A failure or delay in enforcing any term is not a waiver of it.
(d) Severability. If any provision is found unenforceable, it will be limited to the minimum extent necessary and the rest of this agreement will remain in effect.
(e) Assignment. Neither party may assign this agreement without the other party's written consent, except to a successor in a merger or sale of substantially all of its business, on notice.
(f) Relationship. Nothing in this agreement creates a partnership, joint venture or agency relationship unless expressly stated.
(g) Counterparts and electronic signatures. This agreement may be signed in counterparts and by electronic signature, each of which is an original and together form one agreement.
(h) Independent advice. Each party has had the opportunity to review this agreement with its own legal counsel and signs it voluntarily.
EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS READ THIS AGREEMENT, UNDERSTANDS IT AND SIGNS IT VOLUNTARILY.
COMPANY: ______________________ Name/Title: ______________ Date: __________
EMPLOYEE: _____________________ Date: __________
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This free template is provided by ClauseAudit for general informational purposes and is not legal advice. Have it reviewed before use. Replace all [BRACKETED] placeholders.When to use this template
- An employer is ending someone's employment and offering pay or benefits beyond what is already owed.
- An employee has received a severance offer and wants to compare it with a standard, balanced version.
- A layoff or restructuring where the company wants a release of claims in exchange for severance.
How to fill it in
- Enter the separation date, then confirm final wages and accrued vacation are paid regardless of signing, as many states require.
- Set the severance amount and choose lump sum or installments.
- Decide COBRA premium support and how long it lasts.
- Describe any change to equity treatment, or state there is none.
- Check the employee's age: at 40 or older, keep the 21-day review and 7-day revocation periods (45 days for group terminations).
- Decide whether confidentiality and non-disparagement clauses are needed, and keep them mutual and limited.
- Name who receives a revocation notice, and sign.
Key clauses to check
- General release
- This is what the employee gives up. Check which claims are released and that non-waivable rights are carved out.
- Review and revocation periods
- Federal law (the Older Workers Benefit Protection Act) requires specific time periods for age-discrimination waivers by employees 40 and over. Missing them can make the release invalid for age claims.
- Protected rights carve-out
- Agreements cannot stop employees from reporting to government agencies, and several laws limit confidentiality about unlawful workplace conduct.
- Non-disparagement
- Should be mutual where possible and must not restrict protected rights.
- Severance amount and timing
- Make sure payment timing is clear and the amount reflects what the release is worth.
State-specific notes: CA, TX, NY, FL, IL
Employment rules that affect this template in the five largest states, summarized as of 2025. Laws change and cities add their own rules, so confirm the current law before signing.
California
- Employee non-competes are void under Business and Professions Code §16600, and since 2024 California law voids them regardless of where they were signed. Customer non-solicits are generally void too; trade secret protection remains.
- Final wages are due immediately on termination, and within 72 hours if an employee quits without notice (immediately with 72 hours’ notice). Late payment triggers waiting-time penalties.
- Accrued, unused vacation is earned wages and must be paid out on separation; “use it or lose it” policies are not allowed.
Texas
- Non-competes are enforceable if ancillary to an otherwise enforceable agreement and reasonable in time, geography and scope (Business and Commerce Code §15.50). Courts may reform overbroad clauses rather than void them. Special rules apply to physicians.
- Customer and employee non-solicits are generally enforced when reasonable and tied to a legitimate interest.
- Final pay is due within six calendar days after a discharge, and by the next regular payday after a resignation.
- Payout of unused vacation depends on the employer’s written policy or agreement.
New York
- Non-competes and non-solicits are enforced only if reasonable and necessary to protect legitimate interests such as trade secrets or unique services. Proposed statewide bans have been debated; check current law.
- Final wages are due by the next regular payday after separation.
- Unused vacation must be paid out unless a written policy clearly says otherwise.
Florida
- Florida strongly enforces reasonable restrictive covenants under Fla. Stat. §542.335. For employees, restrictions of six months or less are presumed reasonable and over two years presumed unreasonable.
- A 2025 law (the CHOICE Act) allows longer, more strongly enforced non-compete and garden leave agreements for employees earning above a wage threshold, with notice and review requirements. Check whether it applies.
- Florida has no specific final-paycheck deadline or vacation payout statute; the employer’s policy and agreement control.
Illinois
- Under the Illinois Freedom to Work Act, non-competes are void for employees earning $75,000 a year or less (rising to $80,000 in 2027) and require adequate consideration.
- Customer and employee non-solicits are void for employees earning $45,000 a year or less (rising to $47,500 in 2027).
- Employers must advise employees in writing to consult a lawyer and give at least 14 calendar days to review a covenant before signing.
- Final compensation, including earned vacation, is due by the next regular payday after separation.
Another state? See the rules for all 50 states and DC.
Frequently asked questions
Is severance pay required by law?
Generally no in the US. Severance is usually a matter of contract or company policy, although final wages and, in many states, accrued vacation must be paid regardless.
How long do I have to sign a severance agreement?
Employees 40 or older must generally get at least 21 days (45 for group layoffs) and 7 days to revoke. Others get whatever time the agreement gives, often one to three weeks.
Can I negotiate a severance agreement?
Yes. Pay, benefits, equity treatment, references, non-disparagement and restrictive covenants are commonly negotiated before signing.
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This free template is general information, not legal advice, and is no substitute for a qualified attorney. Laws vary by state; have it reviewed by a lawyer before you use or sign it.