Should You Make an Employee Sign a Separation Agreement When They Quit?

When an employee quits, making them sign a separation agreement might seem appealing to employers. However, this approach can be both complicated and unnecessary. Let's delve into the details to understand the implications and determine the best course of action.

Legal Considerations and Enforceability

In cases where employees voluntarily resign, the likelihood of them waiving their right to sue the employer is low. For a separation agreement to be enforceable, the leaving employee would generally need to receive something of significant value to waive their right to sue the employer. In most cases, this is not the situation, as the former employee does not intend to sue for any reason.

Forcing employees to sign a separation agreement without offering any benefits poses a risk of being seen as a poor business practice. It would be unfair to expect employees to sign away their rights without any genuine incentives. An agreement that requires such waivers should only be entered into if both parties have mutual agreement and some form of compensation.

Advantages to Employers

It is always beneficial for an employer to have an employee sign a separation agreement. These agreements can protect the company from legal claims, prevent competitors from luring away key employees, and maintain a cordial relationship with the former employee. However, the decision to ask for a signed agreement should be made carefully, considering both the legal and ethical implications.

Departing employees are not legally required to sign separation agreements. Some employees may choose to sign the agreement if they are offered an incentive such as severance pay. Others may sign if they believe the agreement is in their best interest. A small percentage of employees, however, may refuse to sign even with severance due to a potential legal claim they believe they have against their employer.

Documentation and Resignation Letters

Even if an employee resigns, their resignation implies an agreement to the terms. Employers should document and maintain these actions as part of the employee's file. This documentation can be crucial in defending any potential legal claims.

A severance agreement is a document offered during terminations, layoffs, or downsizing. It requires the employee to release the company from certain liabilities in exchange for a severance package. However, when an employee quits, the employer no longer has the leverage to demand such commitments.

Selecting the Best Approach

In most instances, all an employer needs from a departing employee is a signed resignation letter. It is the employee's obligation to provide this, and the employer cannot compel them to do so.

If an employer decides that severance is warranted, it is crucial to consult with a lawyer to ensure compliance with state laws. People over the age of 40 have additional rights when accepting a severance agreement.

Conclusion

The decision to make an employee sign a separation agreement when they quit should be approached with caution. It is generally not necessary and may not be enforceable unless the employee is offered something of significant value. Employers should focus on maintaining a positive relationship with departing employees and documenting their resignation process to avoid any legal complications.