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: Properly scoped indemnities protect against unexpected litigation costs and serve as a deterrent against negligent or willful misconduct.
Negotiation strategy
If you're the Company:
Negotiate for mutual indemnification to ensure both parties are equally protected. Include specific carve-outs for gross negligence and willful misconduct.
If you're the Employee:
Aim to limit indemnity obligations to direct actions and seek a liability cap. Ensure clarity on exclusions and carve-outs.
Essential elements
1
Scope of Indemnity
Defines covered claims and liabilities.
2
Liability Cap
Sets maximum financial exposure.
3
Carve-Outs
Excludes specific liabilities.
Action framework
ACCEPT
Propose edits when the indemnity scope is too broad or lacks clarity on exclusions.
EDIT
Reject clauses that impose unlimited liability or lack mutuality.
ADD
Add language for specific high-risk activities or financial guarantees.
PRO TIP
Always review indemnity clauses in the context of the entire agreement to ensure consistency and fairness.
Example clauses
FAVORABLE
Balanced Indemnity Clause
"Each party agrees to indemnify, defend, and hold harmless the other party from any and all claims, losses, liabilities, and expenses arising from the indemnifying party’s negligence or willful misconduct."
NEUTRAL
Standard Indemnity Clause
"The indemnifying party shall indemnify the other party for claims arising directly from its actions, subject to a liability cap of $X."
UNFAVORABLE
Unlimited Liability Clause
"The indemnifying party shall indemnify the other party for any and all claims without limitation."
Fallbacks
High-Risk Projects
For projects involving hazardous work, include comprehensive indemnity clauses with specific carve-outs for environmental liabilities.
Financially Unstable Party
Require the indemnifying party to maintain insurance coverage to ensure they can meet indemnity obligations.
Cross-Border Transactions
Consider jurisdictional differences in indemnity enforcement and include choice of law provisions.
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WEEK 1
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WEEK 2
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WEEK 3
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WEEK 4
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