A severance agreement, annotated: what you are being asked to sign away

Almost all the reading time on a severance agreement goes to the payment paragraph, the shortest section and the one that stops mattering once the money clears. The clauses that shape the next several years have no figure in them: what you released, what you may say, what a future employer will hear.

What follows is a composite of a standard US separation agreement: what each clause does and what to ask about it. It does not tell you whether to sign, and it cannot tell you what any clause means for you. That is the point of the last section.

The payment, and what it is in exchange for

"In consideration for the promises set forth herein, the Company will pay Employee eight weeks of base salary, less withholdings, within 30 days of the Effective Date."

Two phrases do structural work. "In consideration for" means the money is the price of everything else in the document, an exchange rather than a gift. "Effective Date" is defined elsewhere, often after a revocation window, so the payment clock may not start when you sign it.

What the employer owes you regardless of signing, such as wages for time worked, is set by state law and varies. Ask in writing which parts of the money are conditional and which are not.

Look also for what is absent: benefits continuation and its cost, a bonus period in progress, unvested equity, accrued unused time off.

The release of claims

"Employee hereby releases and forever discharges the Company from any and all claims, known or unknown, arising out of or relating to Employee's employment, to the fullest extent permitted by law."

This is the clause the agreement exists for: a promise not to bring legal claims connected to your employment, written as broadly as the drafter can make it. We are not going to tell you what it covers. Which claims can be released, which cannot, and what a release must say to be effective are questions of federal and state law turning on facts about you.

What you can do is notice its shape. Does it cover individuals, affiliates and successors. Does it include a promise not to file as well as not to sue. Does it carve anything out. Mark each, and take the marked copy to an attorney.

The clauses about what you can say afterwards

"Employee agrees not to make any statement that disparages or could reasonably be expected to harm the reputation of the Company, its officers, directors or employees."

Non-disparagement is often mutual in principle and one-sided in practice unless you ask. Does it bind the company back, and if so which people; how long does it run; what happens on breach.

"Employee shall keep the terms and existence of this Agreement strictly confidential, and shall not disclose them to any person other than Employee's spouse, attorney and tax advisor."

Confidentiality typically covers the agreement itself and, separately, company information you had access to. Check whether those are one clause or two, and what it says about discussing compensation or working conditions, an area with its own rules. Note whether a non-compete, non-solicit or assignment of inventions is continued or expanded here.

The reference clause

"Upon inquiry from a prospective employer, the Company will confirm Employee's dates of employment and position held."

It names a practice, not a person. Ask who answers the calls, what will be said about reason for leaving, and whether the commitment covers managers contacted directly rather than HR. If something warmer was agreed out loud, ask for it here: a verbal assurance lasts as long as the person who gave it stays in the job.

The two clocks

"Employee has twenty-one (21) days to consider this Agreement. Employee may revoke within seven (7) days following execution, and the Agreement shall not become effective until the revocation period has expired."

Two separate periods doing different things: one before you sign, one after. The lengths, and whether any are legally required, depend on your circumstances and your jurisdiction.

Treat both as facts to check. Ask in writing what date the employer considers the period to run from, and whether you may have longer. Asking for an extension is normal, not a refusal.

The deadline printed at the top of the page is a term of the document, not a law of nature. Ask what it is based on before you organize your week around it.

Return of property

"Employee shall return all Company property, including documents, devices and credentials, prior to the Separation Date."

Worth taking seriously, because it often runs alongside a line making payment conditional on compliance. List what you hold, hand it over against a written acknowledgment, keep a copy.

Before access ends, separate your own material from the company's: offer letter, reviews, pay records, correspondence about your departure. Copy nothing else.

Who to take this to

An employment attorney licensed in the state where you worked, before you sign, early enough in the consideration period to act on the answer. Bring the whole document, your offer letter, any prior agreements, and your marked-up list. If you are in a union, your representative first.

If the departure followed a complaint, a leave, a medical issue, or anything touching a protected characteristic, say so. It changes what the lawyer looks for.