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Mutual Severance Agreement

Mutual Severance Agreement Template for India

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Key Requirements PROMPT example:

Mutual Severance Agreement

"I need a Mutual Severance Agreement for a senior technology executive in Bangalore, with extensive IP protection clauses and stock option considerations, planning for separation effective March 1, 2025."

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Document background
The Mutual Severance Agreement serves as a crucial legal instrument in Indian employment law, designed to facilitate amicable separation between employers and employees while ensuring legal compliance and protection for both parties. This document is typically used when both parties agree to terminate the employment relationship and wish to document the terms of separation, including financial settlements, ongoing obligations, and mutual releases. The agreement must comply with various Indian labor laws, including the Industrial Disputes Act, 1947, Payment of Gratuity Act, 1972, and relevant state-specific regulations. It outlines severance payments, tax implications, confidentiality requirements, and other post-employment obligations, while providing clarity on full and final settlement terms to prevent future disputes.
Suggested Sections

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

2. Background: Brief history of employment relationship, reason for separation, and mutual intent to settle all claims

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

4. Termination Date: Clear specification of the last day of employment and handover requirements

5. Severance Payment: Detailed breakdown of the severance package, payment terms, and timing

6. Full and Final Settlement: Confirmation that the severance payment represents full and final settlement of all claims

7. Tax Implications: Statement regarding tax treatment of payments and responsibilities for tax payments

8. Confidentiality Obligations: Ongoing obligations regarding company confidential information

9. Return of Company Property: Requirements and timeline for returning all company assets and documents

10. Release of Claims: Mutual release of all claims between parties

11. Non-Disparagement: Mutual agreement not to make negative statements about each other

12. Governing Law and Jurisdiction: Specification of Indian law as governing law and relevant jurisdiction

13. Entire Agreement: Confirmation that this document represents the complete agreement between parties

Optional Sections

1. Non-Compete Obligations: Restrictions on future employment with competitors, if applicable and reasonable under Indian law

2. Reference and Announcements: Terms regarding future employment references and public announcements about the separation

3. Post-Employment Cooperation: Terms for employee assistance in transition or future litigation/investigations

4. Outplacement Services: Details of any career transition support being provided

5. Benefits Continuation: Any extension of medical or other benefits post-termination

6. Stock Options/RSUs: Treatment of outstanding equity compensation, if applicable

7. Legal Counsel Acknowledgment: Acknowledgment that parties had opportunity to seek independent legal advice

Suggested Schedules

1. Schedule A - Severance Calculation: Detailed breakdown of severance amount including basic salary, gratuity, leave encashment, and other components

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

3. Schedule C - Benefits Summary: Summary of any continuing benefits and their duration

4. Schedule D - Outstanding Claims Settlement: List of any pending reimbursements or claims to be settled

5. Schedule E - Confidential Information: Specific details of confidential information and trade secrets to be protected

6. Appendix 1 - Resignation Letter: Standard format resignation letter to be submitted by employee

7. Appendix 2 - Release Form: Detailed release of claims form as required by local labor law

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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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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