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Layoff Severance Agreement

Layoff Severance Agreement Template for India

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Key Requirements PROMPT example:

Layoff Severance Agreement

"I need a Layoff Severance Agreement for our Mumbai-based IT company that's reducing its workforce by 50 employees in March 2025, including provisions for outplacement services and accelerated vesting of stock options."

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Document background
The Layoff Severance Agreement is a crucial document used in India when companies need to implement workforce reductions while ensuring legal compliance and fair treatment of employees. It becomes necessary during organizational restructuring, economic downturns, or strategic realignment of business operations. The document must strictly adhere to Indian labor laws, including the Industrial Disputes Act, 1947, state-specific Shop and Establishment Acts, and other relevant employment legislation. This agreement typically includes comprehensive details about severance compensation, statutory benefits, continuation of certain benefits, release of claims, and post-employment obligations. It serves as a legally binding document that protects both employer and employee interests while ensuring transparent communication of separation terms and conditions.
Suggested Sections

1. Parties: Identification of the employer and employee, including full legal names, addresses, and designation

2. Background: Brief context of employment history, reason for layoff, and basis for the agreement

3. Definitions: Key terms used throughout the agreement including 'Effective Date', 'Severance Payment', 'Release Period', etc.

4. Separation Date: Clear specification of the last day of employment and handover responsibilities

5. Severance Payment: Detailed breakdown of severance amount, calculation method, payment schedule, and tax implications

6. Statutory Benefits: Details of gratuity, provident fund, earned leave encashment, and other statutory dues

7. Release of Claims: Mutual release of claims and legal rights between parties

8. Confidentiality Obligations: Ongoing obligations regarding company confidential information

9. Company Property: Requirements for return of company property and data

10. References: Agreement on how employment references will be handled

11. Governing Law: Specification of Indian law as governing law and jurisdiction

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

Optional Sections

1. Outplacement Services: Details of any career transition support provided by the company

2. Non-Compete Clause: Include only if legally enforceable and reasonable in scope as per Indian law

3. Continuation of Benefits: Any extension of medical insurance or other benefits beyond separation

4. Equity/Stock Options: Treatment of outstanding stock options or equity, if applicable

5. Re-employment Rights: Any provisions regarding potential future re-employment

6. Legal Consultation: Acknowledgment of right to seek legal counsel and time provided for review

7. Dispute Resolution: Optional arbitration or mediation clauses for dispute resolution

8. Non-Disparagement: Mutual agreements regarding post-employment communications

Suggested Schedules

1. Schedule A - Severance Calculation: Detailed calculation of severance amount including years of service, salary components, and statutory formulae

2. Schedule B - Benefits Summary: Comprehensive list of benefits and their treatment post-separation

3. Schedule C - Company Property Checklist: List of company assets to be returned

4. Schedule D - Release of Claims: Detailed release of claims form as per Indian legal requirements

5. Appendix 1 - Payment Timeline: Schedule of severance and statutory payment dates

6. Appendix 2 - Statutory Compliance Checklist: Checklist ensuring compliance with all applicable Indian labor laws

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈË°æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
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Relevant Industries

Information Technology

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Relevant Teams

Human Resources

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Relevant Roles

Chief Executive Officer

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Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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