A Severance & Employment Separation Agreement formalizes the terms of an employee‚ exit and related payments. This playbook emphasizes release language, confidentiality, and non-disparagement clauses.
Why This Matters: Clear disputeâ€resolution pathways minimize litigation costs, uncertainties, and jurisdictional conflicts.
Negotiation strategy
If you're the Company:
Ensure the dispute resolution clause aligns with the company's preferred jurisdiction and governing law. Consider arbitration to maintain confidentiality and control over the process.
If you're the Employee:
Negotiate for a neutral jurisdiction and governing law that does not disproportionately favor the employer. Consider mediation as a first step to preserve the working relationship.
Essential elements
1
Governing Law
Specifies applicable legal framework.
2
Jurisdiction
Determines where disputes are resolved.
3
Arbitration
Alternative to court litigation.
Action framework
ACCEPT
Propose edits if the governing law or jurisdiction is unfavorable.
EDIT
Reject if the clause imposes excessive burdens or risks.
ADD
Add if no dispute resolution mechanism is present.
PRO TIP
Always ensure the dispute resolution process is enforceable in the chosen jurisdiction.
Example clauses
FAVORABLE
Preferred Arbitration Clause
"Any dispute arising out of or in connection with this agreement shall be resolved by arbitration in [Preferred Jurisdiction] under the rules of [Arbitration Institution]. The governing law shall be the laws of [Preferred State]."
NEUTRAL
Fallback Mediation Clause
"Disputes shall be subject to mediation followed by arbitration in [Fallback Jurisdiction] if unresolved. The governing law shall be the laws of [Fallback State]."
UNFAVORABLE
Unilateral Jurisdiction Clause
"All disputes shall be resolved exclusively in the courts of [Employer's State], under its laws."
Fallbacks
Cross-Border Agreements
In cross-border agreements, consider international arbitration to avoid local court biases and ensure neutrality.
High-Value Contracts
For high-value contracts, specify a well-regarded arbitration institution to ensure a fair and expert resolution process.
Long-Term Partnerships
In long-term partnerships, mediation can be a first step to preserve relationships before escalating to arbitration.
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WEEK 3
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WEEK 4
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