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Employee Release Agreement Template for India

A comprehensive legal document governed by Indian employment law that formalizes the termination of an employment relationship between an employer and employee. This agreement outlines the terms and conditions of separation, including final settlement of dues, release of mutual claims, confidentiality obligations, and post-employment responsibilities. It ensures compliance with various Indian labor laws including the Industrial Disputes Act, 1947, and provides legal protection to both parties by clearly defining their rights, obligations, and the terms of separation.

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What is a Employee Release Agreement?

The Employee Release Agreement is a critical document used in Indian corporate settings when formally concluding an employment relationship. It serves as a legally binding instrument that protects both employer and employee interests by clearly documenting the terms of separation, financial settlements, and ongoing obligations. This agreement becomes particularly important in situations involving voluntary resignations, mutual separations, or negotiated exits. It must comply with various Indian labor laws, including the Industrial Disputes Act, 1947, Payment of Gratuity Act, 1972, and relevant state-specific regulations. The document typically includes provisions for final settlements, confidentiality requirements, non-compete clauses (where applicable), and the return of company property, while ensuring all statutory requirements under Indian law are met.

What sections should be included in a Employee Release Agreement?

1. Parties: Identification of the employer and employee with complete details

2. Background: Brief history of employment relationship and context for the release agreement

3. Definitions: Key terms used throughout the agreement

4. Effective Date of Release: Specific date when the employment relationship terminates

5. Settlement of Dues: Details of final payment including salary, benefits, and other compensations

6. Release and Waiver: Mutual release of claims and liabilities between parties

7. Confidentiality Obligations: Ongoing obligations regarding confidential information

8. Return of Company Property: Requirements for returning all company assets and materials

9. Post-Employment Obligations: General continuing obligations after employment ends

10. Tax Implications: Statement on tax responsibilities for settlement amounts

11. Governing Law: Specification of applicable Indian laws

12. Entire Agreement: Statement that this document represents the complete agreement between parties

13. Execution: Signature blocks and execution details

What sections are optional to include in a Employee Release Agreement?

1. Non-Compete Clause: Restrictions on future employment - used for senior positions or when dealing with sensitive information

2. Non-Solicitation: Restrictions on soliciting employees/clients - typically for sales or senior roles

3. Intellectual Property Rights: Special provisions for employees involved in IP creation

4. Stock Options/Share Benefits: Treatment of outstanding stock options or shares - for employees with equity compensation

5. References: Agreement on providing employment references - when specifically negotiated

6. Cooperation in Transition: Terms for knowledge transfer and transition - for key positions

7. Dispute Resolution: Specific procedures for resolving disputes - for high-risk terminations

8. Severance Benefits: Additional severance payments beyond statutory requirements - for negotiated exits

9. Medical Benefits Extension: Continuation of medical benefits - for long-term employees or special cases

What schedules should be included in a Employee Release Agreement?

1. Schedule A - Financial Settlement: Detailed breakdown of all financial settlements including salary, benefits, and deductions

2. Schedule B - Company Property Checklist: List of all company property to be returned

3. Schedule C - Confidential Information: Specific details of confidential information covered under the agreement

4. Schedule D - Outstanding Benefits: List of any outstanding benefits, leaves, or reimbursements

5. Appendix 1 - Statutory Declarations: Required statutory declarations and forms

6. Appendix 2 - Exit Interview Form: Documentation of exit interview and handover status

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

India

Publisher

Genie AI

Cost

Free to use

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