A termination agreement is a legal form which is signed at the termination of an agreement or arrangement. This term is most commonly used in reference to termination agreements which are used when an employee is released from employment, but the term can also refer to an agreement which terminates a lease or another type of contract. Before signing any forms upon terminating an agreement, it is critical to read them very closely, as there may be clauses which are unexpected or surprising.
In the case of an employment termination agreement, the employer presents the agreement at the time that an employee is separated by being fired or laid off. Employees may also negotiate such agreements when they leave voluntarily. The agreement, also known as a severance agreement or separation agreement, sets out the rights and responsibilities of both parties so that everyone understands what is involved in the termination.
On the part of the employer, the agreement might guarantee provision of severance, temporary extension of health benefits, and other terms. The employee may be asked not to seek employment with competing firms for a set period of time or to comply with other terms. It is important to note that a termination agreement can include clauses which ask employees to waive their rights. If an employee signs such an agreement and later attempts to sue for benefits, wrongful termination, or other reasons, the agreement may bar the employee from doing so.
When an employee is offered a termination agreement, she or he should ask to take it home for review. Employees cannot be compelled to sign documents and they are well within their right to request an opportunity to look a proposed agreement over. It is advisable to consult an attorney to confirm that the agreement if reasonable. An attorney may also have recommendations for changes which the employee might want to consider.
Other termination agreements should be reviewed with equal care. If there is a push to sign a termination agreement, it can be a sign that there is something in the agreement which the person doing the pushing does not want the person doing the signing to think over with care. Some things to look out for are clauses which waive the right to sue, restrictive clauses which limit future activities, or clauses which seem to conflict with clauses in other paperwork related to the same agreement.