How to set up a seperation agreement for terminated employees

In Ohio, employers have the right to terminate an employee for any reason. "But if you are going to give people transition benefits, you want to have a clean break," warns John Cernelich, a partner with Calfee, Halter and Griswold and co-chair of the firm's labor and employment group.

 
That means setting up a separation agreement. The first issue it should address is compensation, either a continuation of salary for a specific time frame or a lump sum severance pay. Unused vacation pay should also be included.

Next, make sure you address the issue of health insurance. Under federal health standards, an employer must offer COBRA (Consolidated Omnibus Budget Reconciliation Act) health insurance at the employee's expense for three months.

The agreement should also include instructions for the employee to return any company property, such as keys, uniforms or laptops.
Employees should be reminded if they have signed a non-compete and/or a non-disclosure agreement during their employment. And you may want to include a non-disparagement agreement, which prevents an employee from talking negatively about you and your company.

Many companies also offer outplacement services in their separation agreements, which provides terminated employees professional job-search services and counseling. "Instead of employees fixating and ruminating on their termination, they can focus on their future," Cernelich says.

Finally, Cernelich advises including a release of claims in the separation agreement.

"Anybody who is let go can possibly claim the reason was because of discrimination," he says. "When you are transitioning someone, it makes good sense to get a full release so you have a clean transition with that employee."