An Employee Severance Agreement is a crucial document used when formally ending an employment relationship in the Philippines. It serves to protect both employer and employee interests by clearly documenting the terms of separation, including severance payments, benefits, and mutual obligations. The agreement must comply with Philippine Labor Code requirements, DOLE regulations, and relevant employment laws. It is typically used in scenarios of voluntary resignation, mutual separation, or termination without cause, providing legal certainty and closure for both parties. The document helps prevent future disputes by clearly outlining financial terms, confidentiality obligations, and release of claims, while ensuring all statutory requirements under Philippine law are met.
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1. Parties: Identification of the employer and employee, including complete legal names and addresses
2. Background: Brief history of employment relationship, reason for separation, and purpose of the agreement
3. Definitions: Key terms used throughout the agreement, including 'Termination Date', 'Severance Pay', and 'Released Claims'
4. Termination of Employment: Formal statement of employment termination, including effective date and final working day
5. Severance Payment: Details of severance amount, calculation method, payment schedule, and tax treatment
6. Final Wages and Benefits: Treatment of accrued salary, unused leave, pro-rated 13th month pay, and other statutory benefits
7. Release of Claims: Employee's waiver of rights to bring future claims against the employer, subject to Philippine law
8. Company Property: Requirements for return of company property, documents, and data
9. Tax Matters: Tax treatment of payments and respective responsibilities of parties
10. Governing Law: Specification of Philippine law as governing law and jurisdiction
11. Execution: Signature blocks and attestation requirements
1. Non-Compete Obligations: Restrictions on future employment, used for senior employees where legally enforceable under Philippine law
2. Confidentiality Obligations: Ongoing obligations regarding confidential information, typically included for employees with access to sensitive information
3. Reference and Announcement: Agreement on how departure will be communicated and nature of references to be provided
4. Outplacement Support: Details of any career transition services offered, typically for senior employees
5. Stock Options/Equity: Treatment of any outstanding equity compensation, relevant for employees with share-based compensation
6. Medical Benefits Extension: Any continuation of health benefits beyond termination, if offered
7. Legal Fees: Provisions regarding payment of legal fees for agreement review, typically for senior executives
8. Mutual Non-Disparagement: Agreements regarding future statements about each other, common in senior level separations
1. Schedule 1 - Severance Calculation: Detailed breakdown of severance payment calculation including base salary, years of service, and statutory factors
2. Schedule 2 - Benefits Summary: List of all benefits and their treatment post-termination
3. Schedule 3 - Company Property Checklist: Itemized list of company property to be returned
4. Schedule 4 - Release Claims Detail: Comprehensive list of claims being released
5. Schedule 5 - Payment Timeline: Detailed schedule of all payments to be made and their dates
6. Appendix A - Statutory Calculations: Calculations of statutory benefits including 13th month pay and leave conversion
7. Appendix B - Tax Computation: Breakdown of tax treatment for different payment components
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