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What are the typical terms for a Severance Agreement?

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Introduction
Typical Terms of a Severance Agreement 2.1. Payment of Severance Pay 2.2. Release of Claims 2.3. Confidentiality 2.4. Non-Competition Clause 2.5. Non-Solicitation Clause 2.6. Non-Disparagement Clause 2.7. Return of Company Property 2.8. Acknowledgement of Receipt 2.9. Governing Law and Jurisdiction 2.10. Entire Agreement 2.11. Severability 2.12. Waiver 2.13. Notices
Conclusion

Introduction

A severance agreement is a legally binding contract between an employer and an employee that outlines the terms of the employee's termination of employment. It typically includes provisions regarding severance pay, release of claims, confidentiality, and other relevant matters. This document will explore the typical terms found in a severance agreement in Kenya.

Typical Terms of a Severance Agreement

2.1. Payment of Severance Pay

Amount: The agreement should specify the amount of severance pay to be paid to the employee. This amount may be calculated based on factors such as the employee's length of service, salary, and position.
Payment Schedule: The agreement should outline the schedule for payment of the severance pay, including the frequency and deadlines.
Tax Implications: The agreement should address the tax implications of the severance pay, including any applicable withholding or reporting requirements.

2.2. Release of Claims

Scope of Release: The agreement should clearly define the scope of claims that the employee is releasing. This may include claims for wrongful termination, discrimination, harassment, breach of contract, and other employment-related claims.
Consideration: The agreement should state the consideration for the employee's release of claims, which is typically the severance pay.
Time Limit: The agreement may include a time limit for the employee to file any claims that are not released.

2.3. Confidentiality

Confidential Information: The agreement should define what constitutes confidential information, including trade secrets, customer lists, financial data, and other sensitive information.
Obligations: The agreement should outline the employee's obligations to maintain the confidentiality of such information, both during and after the employment relationship.
Enforcement: The agreement should specify the consequences of breaching the confidentiality provisions, such as legal action or financial penalties.

2.4. Non-Competition Clause

Scope of Restriction: The agreement should define the geographic area and time period during which the employee is prohibited from competing with the former employer.
Reasonableness: The non-competition clause should be reasonable in scope and duration to be enforceable.
Enforcement: The agreement should specify the remedies available to the employer in the event of a breach of the non-competition clause.

2.5. Non-Solicitation Clause

Scope of Restriction: The agreement should define the scope of the non-solicitation clause, including the types of individuals or entities that the employee is prohibited from soliciting.
Reasonableness: The non-solicitation clause should be reasonable in scope and duration to be enforceable.
Enforcement: The agreement should specify the remedies available to the employer in the event of a breach of the non-solicitation clause.

2.6. Non-Disparagement Clause

Scope of Restriction: The agreement should define the types of statements that the employee is prohibited from making about the former employer.
Reasonableness: The non-disparagement clause should be reasonable in scope and duration to be enforceable.
Enforcement: The agreement should specify the remedies available to the employer in the event of a breach of the non-disparagement clause.

2.7. Return of Company Property

Property List: The agreement should list all company property that the employee is required to return, including laptops, cell phones, and other equipment.
Deadline: The agreement should specify the deadline for returning the company property.
Consequences: The agreement should outline the consequences of failing to return the company property, such as legal action or financial penalties.

2.8. Acknowledgement of Receipt

Agreement Copy: The agreement should include an acknowledgement by the employee that they have received a copy of the agreement.
Legal Advice: The agreement may also include an acknowledgement by the employee that they have had the opportunity to consult with legal counsel regarding the agreement.

2.9. Governing Law and Jurisdiction

Governing Law: The agreement should specify the law that will govern the interpretation and enforcement of the agreement.
Jurisdiction: The agreement should specify the jurisdiction where any disputes arising from the agreement will be resolved.

2.10. Entire Agreement

Complete Agreement: The agreement should state that it constitutes the entire agreement between the parties regarding the termination of employment.
Prior Agreements: The agreement may also state that it supersedes any prior agreements or understandings between the parties.

2.11. Severability

Invalid Provisions: The agreement should include a severability clause, which states that if any provision of the agreement is held to be invalid or unenforceable, the remaining provisions will remain in full force and effect.

2.12. Waiver

Waiver of Rights: The agreement should include a waiver clause, which states that neither party can waive any of its rights under the agreement without the written consent of the other party.

2.13. Notices

Method of Notice: The agreement should specify the method of notice that will be used to communicate with the parties, such as email or certified mail.
Address: The agreement should include the addresses of the parties for purposes of receiving notices.

Conclusion

Severance agreements are important legal documents that can protect both employers and employees during the termination of employment. By carefully considering the typical terms discussed above, parties can ensure that their agreements are comprehensive, fair, and legally enforceable. It is always advisable to consult with legal counsel to ensure that the terms of the agreement are appropriate for the specific circumstances.