Separation Agreement & General Release — What to Include

When an employment relationship ends, a Separation Agreement and General Release is how both parties close the chapter cleanly. The employer provides severance or other consideration; the departing employee releases legal claims. Done right, it protects the business from future litigation and gives the employee a clear, fair exit.

What Is a Separation Agreement and General Release?

A Separation Agreement and General Release is a contract between an employer and a departing employee that documents the terms of the employee's departure and includes a release of legal claims the employee may have against the company. In exchange for the release, the employer typically provides severance pay, extended benefits, or other consideration.

It is distinct from a simple resignation letter or termination notice — it is a binding legal agreement with significant consequences for both parties.

When Do You Need One?

You need a Separation Agreement and General Release when:

  • You are terminating an employee and offering severance
  • An employee is resigning and you want to resolve any potential claims
  • A departure involves a dispute or elevated legal risk
  • You want to protect the company from future employment-related litigation

Not every departure requires one — but for any termination where legal exposure is possible, it is strongly advisable.

What Should a Separation Agreement and General Release Include?

1. Separation Date

Define the employee's official last day of employment, which determines final pay obligations, benefits continuation, and equity treatment.

2. Severance and Consideration

Specify exactly what the employee will receive in exchange for signing — severance pay, continuation of benefits, accelerated vesting, outplacement services, or other benefits. The consideration must be something the employee is not already entitled to; otherwise the release may not be enforceable.

3. General Release of Claims

The employee releases all known and unknown claims against the company, its officers, directors, employees, and affiliates. This typically includes claims under federal and state employment laws.

4. ADEA Compliance (For Employees 40 and Older)

The Age Discrimination in Employment Act (ADEA) imposes specific requirements for releases from employees 40 and over: a 21-day review period (45 days for group terminations), a 7-day revocation period after signing, and specific disclosure language. Failure to comply renders the age discrimination release unenforceable.

5. Return of Company Property

Require the return of all company property — equipment, documents, access credentials, and any confidential information.

6. Confidentiality of Agreement

Both parties agree to keep the terms of the separation confidential, except as required by law.

7. Non-Disparagement

Each party agrees not to make disparaging statements about the other. Scope and carve-outs (e.g., truthful statements to regulators) should be clearly defined.

8. Cooperation

Require the employee to cooperate with the company in connection with any legal proceedings, regulatory inquiries, or transition activities after departure.

9. Surviving Obligations

Confirm that any obligations that survive employment — confidentiality, IP assignment, non-solicitation — remain in effect after the separation.

10. Governing Law

Specify which state's law governs the agreement.

Common Mistakes Founders Make

Providing inadequate consideration. A release is only enforceable if the employee receives something they weren't already entitled to. Promising to pay wages already owed does not constitute adequate consideration for a release.

Not complying with ADEA requirements. Releases from employees 40 and over have specific legal requirements. A non-compliant release may not protect you from age discrimination claims.

Rushing the signing. Pressuring an employee to sign immediately can undermine enforceability. Allow the legally required or reasonable review period.

Omitting surviving obligations. If the employee signed a confidentiality or non-solicitation agreement at hire, confirm those obligations survive in the separation agreement. Don't assume they carry over automatically.

Why This Matters for Founders

Employment litigation is expensive even when you win. A well-drafted Separation Agreement and General Release is one of the most effective tools for managing that risk at the moment of departure. It brings clarity to a difficult moment — for the business and the employee — and allows both parties to move forward.

Get a Lawyer-Drafted Contract Without the Lawyer Bill

Separation Agreements drafted by attorneys typically cost $1,000–$2,500. TalkingTree gives you the same quality without the invoice.

TalkingTree's Separation Agreement and General Release template was built by experienced business attorneys and is available through the Contract Studio. Customize it to the situation, fill it out, and send it for signature — all in one platform.

  • Business membership ($59.99/mo): Full access to the Contract Studio and a library of 100+ attorney-drafted templates, plus limited e-signature included. One contract alone covers the cost of your first month.
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This page is for informational purposes only and does not constitute legal advice. For advice specific to your situation, consult a licensed attorney.