As has been discussed in a prior article on the Albee Law Blog, Illinois is an employment at will state. This means that employers are free to terminate an employee for any reason at any time, so long the decision is not based on unlawful discrimination or another exception to the employment at will doctrine.
Even though an employer has a right to terminate an employee, terminating an employee can often cause conflict and expose an employer to future litigation. One way to avoid this conflict is by utilizing an employment separation agreement (“Employment Separation Agreement”), sometimes referred to as a separation and release agreement. It is a way to end the working relationship in an amicable fashion. In other words, a friendly employment divorce.
Key Elements of an Employment Separation Agreement
An employer may want to protect itself against claims that could turn into a lawsuit after the termination of an employee. The most significant element of an Employment Separation Agreement is the release of claims. The release of claims is provided by the employee to the employer in exchange for severance benefits and/or or a separation payment, which the employee would not otherwise have been entitled to receive. The Employment Separation Agreement will often state that the employee acknowledges and agrees that the separation payment and/or severance benefits offered by the employer is sufficient consideration to require the employee to abide by the obligations in the Employment Separation Agreement. There are many claims, demands or actions that may be subject to release in an Employment Separation Agreement, including claims pertaining to unlawful discrimination, employment practices and harassment. A properly drafted Employment Separation Agreement will obtain a broad release of claims in favor of the employer.
Benefits of an Employment Separation Agreement
In a word, an Employment Separation Agreement provides closure to an employer/employee relationship. If there is an issue that would otherwise linger with a former employee, an employer often is best to address it at the point of termination of employment and attempt to resolve the issue amicably and predictably with a properly drafted Employment Separation Agreement.
Another benefit to an Employment Separation Agreement is to assist the employer in the preservation of confidential information. The Employment Separation Agreement can protect against an employee disclosing confidential information of the employer. An Employment Separation Agreement often includes terms stating that the employee has had access to confidential information throughout the course of his or her employment and that the employee has not disclosed the confidential information. Furthermore the terms can state that the employee will not disclose any confidential information after termination of employment and the employee will not make use of any such confidential information.
Finally, and significantly, the Employment Separation Agreement can provide protection to the employer from the employee competing with the employer or soliciting customers or employees of the employer for a period of time after termination of employment. For employers concerned that a former employee may solicit business or employees away from the employer following termination of employment, the Employment Separation Agreement can squarely address this concern and provide an employer with the tools to preserve its key relationships with its employees and customers.
Proper Drafting of Employment Separation Agreement
Employers are wise to obtain the assistance of counsel in drafting an Employment Separation Agreement that fits a particular circumstance. Some claims that employers seek to have released by an employee require that an employee be given 21 days to consider the terms of and execute the Employment Separation Agreement and also allow an employee an additional seven days after signing the Employment Separation Agreement to rescind his or her agreement to it.
In conclusion, an Employment Separation Agreement is a win/win for both the employer and employee. It allows an employer to set forth its rights and make clear that the employee has continued responsibilities that will protect the employer after termination of the employment relationship.
For more information about this article, or Illinois employment law in general, please feel free to contact John W. Albee at Albee Law PC via telephone at (312) 279-0115 or via email at jalbee@albeelaw.com.
