When the time comes to terminate an employee, you must
have a solid employee termination agreement prepared
ahead of time. If you fail to do so, you might find yourself
entrenched in a legal battle that could be costly and
time-consuming. You might even find yourself battling
legal charges if the employee feels that your termination
was discriminatory or that your termination did not have
a solid basis.
What is an employee termination agreement?
An employee termination agreement is a legal contract
that you, the employer, must sign with the terminated
employee. This agreement is legally binding for both
parties.
What should you include in an employee termination agreement?
The exact information included in your employee termination
agreement depends on you, the employee, and the specific
firing situation. For example, you may be terminating
the person’s employment but plan to hire the person
on as a consultant for your business. In this case, employee
termination agreement should explain this.
Regardless, your employee termination agreement will
include the rights and responsibilities of both the employee
and the company. This might include whether the terminated
employee will receive any benefits. It also might stipulate
the employee cannot use the information he or she has
picked up about your business to help your competition.
Most importantly, your employee termination agreement
should specify the employee cannot hold your company
liable for any debt or to bring a lawsuit against your
company.
Who should sign the employee termination agreement?
Obviously, the employee should sign the employee termination
agreement. You should also have at least two more people
sign the agreement as witnesses and as representatives
of your company. If you are the Human Resources Manager
of a company, you will sign the employee termination
agreement. The owner of the company or the employee’s
boss should sign it as well.
If you are a small business owner, you will sign the
agreement. If you do not have any other employees, you
might want to take the agreement to a notary for witnessing.
What format should I use with my employee termination
agreement?
Using the proper wording and formatting is important
when creating an employee termination agreement. Failing
to use certain words or using a word in the wrong place
can change the meaning of the document. This can leave
you vulnerable for a lawsuit. Ideally, you should contact
an attorney to help you create the agreement. Alternatively,
buy a book that provides specific samples of an agreement
and information about how to alter the samples properly
to fit your specific needs.
Employee
Termination Made Easy
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