<PAGE>

                                                                   EXHIBIT 10.19
                                                                   -------------


                 CONFIDENTIAL SEPARATION AGREEMENT AND RELEASE


     THIS SEPARATION AGREEMENT AND RELEASE ("Agreement") is entered into as of
this 2nd day of March 1999, ("Agreement Date") by and between Ortel Corporation
(the "Company") and Stephen K. Workman (the "Employee").

     WHEREAS, the Employee employment relationship between the Company and
Employee is being terminated;

     WHEREAS, Employee and the Company desire to specify the terms of the
separation.

     For and in consideration of the foregoing recitals and the mutual covenants
and agreements set forth herein, the Company and the Employee agree as follows:

     Employment Status.  Employee hereby resigns from his employment with the
     ------------------
Company and any affiliates effective March 5, 1999.  Employee acknowledges that
he has been paid all wages due through the Agreement Date.  On or before March
5, 1999, Employee will be paid all wages due for the period of February 22, 1999
through March 5, 1999, and any accrued, unused vacation pay.  Employee
understands and agrees that he has given up any right to future wages or
benefits from the Company except as specifically set forth herein.

     Return of Company Property.  Employee shall return to the Company, all
     ---------------------------
files, records, reports, data, correspondence, memoranda and other documents
(including handwritten notes regarding, and drafts of same), computer equipment,
pager, keys and all other physical or personal property which Employee received
from the Company and which are the property of the Company.

     Payment to Employee.  In consideration of the release of all claims, the
     --------------------
Company agrees to provide Employee with the following additional payment and
benefits:

     The Company shall pay Employee severance in the amount of $64,500 (less
applicable withholding) in a single lump sum on the eighth (8th) day following
the Agreement Date.

     The Company will amend the Agreements between Employee and the Company
dated December 14, 1998 (the "Option Agreements"), with respect to those options
to purchase 11,825 shares of Company stock at a price of $9.63 which have vested
in accordance with the terms of the Option Agreements through March 5, 1999.
The amended Option Agreements will allow such options to continue to be
exercised until the end of their full term, and that they need not be exercised
within ninety (90) days of March 5, 1999.  All other options shall be
exercisable only in accordance with the current terms of the Option Agreements.
Any unvested options will be cancelled.  In the event that the Company fails to
amend the Option Agreements in accordance with the terms of this paragraph, this
Agreement will be null and void in its entirety.

     If Employee timely exercises his rights under COBRA  for continued health
insurance in accordance with the terms of such the Company's health insurance
plans, the Company will pay the premiums necessary to continue such insurance
coverage for a period of six months immediately following the Agreement Date,
provided; however, that if Employee obtains new employment before the expiration
of the six month period, and is eligible for health benefits from the new
employer, Employee shall promptly notify the Company, and the Company shall not
be required to continue to reimburse COBRA payments thereafter.

     Those certain Promissory Notes in the aggregate amount of $582,934 as
described on Exhibit A (collectively, the "Notes") are hereby modified so that
they become due and payable on September 5, 2000.

     This represents the Company's sole financial obligation to Employee under
this Agreement.

     Consulting.  For the three-month period following March 5, 1999, Employee
     ----------
shall be available up to 8 hours per week to consult with the Company.  Employee
shall work as an independent contractor, and not as an

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                                                                   EXHIBIT 10.19
                                                                   -------------

employee of the Company. As such, he shall not be eligible for any benefits of
employment. Employee shall be paid $125 per hour for his services as requested
by the Company, and shall be reimbursed for such actual out-of-pocket expenses
as Employee incurs with the prior approval of the Company. Employee shall
invoice the Company not later than 15 days after the last day of the month in
which the services are performed, and will be paid within 15 days of receipt of
the invoices by the Company.

Release of the Company by Employee.
-----------------------------------

     General Release.  Employee hereby releases and forever discharges the
     ------------------
Company, its parents, subsidiaries, predecessors, successors and each of it
their associates, owners, stockholders, members, assigns, employees, agents,
directors, officers, partners, representatives, lawyers, donors or contributors
and all persons acting by, through, under, or in concert with them, or any of
them, (collectively the "Releases") of and from any and all manner of action or
actions, causes or causes of action, in law or in equity, suits, debts, liens,
contracts, agreements, promises, liabilities, claims, demands, damages, losses,
costs or expenses, of any nature whatsoever, known or unknown, fixed or
contingent (hereinafter called "Claims"), which they now have or may hereafter
have against the Releases by reason of any and all acts, omissions, events or
facts occurring or existing prior to the date hereof, except as expressly
provided herein.  The Claims released hereunder include, without limitation, any
alleged breach of any employment agreement; any alleged breach of any covenant
of good faith and fair dealing, express or implied; any alleged torts or other
alleged legal restrictions relating to the Employee's employment and the
termination thereof; and any alleged violation of any federal, state or local
statute or ordinance including, without limitation, Title VII of the Civil
Rights Act of 1964, as amended, the Federal Age Discrimination in Employment
Act, the Americans With Disabilities Act, and the California Fair Employment and
Housing Act.  This Release shall not apply to Employee's right to receive the
benefits provided for in the Agreement, or to retirement and/or employee welfare
benefits that have vested and accrued prior to his separation from employment
with the Company; nor shall this Release waive or release any unknown claims
that Employee may have arising exclusively in his capacity as a member of the
Company, rather than as an employee or otherwise.

Release of Unknown Claims.
--------------------------

     EMPLOYEE ACKNOWLEDGES THAT HE IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA
CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:

  "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF
  KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

     EMPLOYEE BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY
RIGHTS HE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW
PRINCIPLES OF SIMILAR EFFECT.

Release of Age Discrimination Claims.
-------------------------------------

     Employee agrees and expressly acknowledges that this General Release
includes a waiver and release of all claims which Employee has or may have under
the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. (S) 621,
et seq. ("ADEA").  The following terms and conditions apply to and are part of
the waiver and release of the ADEA claims under this Agreement:

     That this paragraph and this General Release are written in a manner
calculated to be understood by Employee.

     The waiver and release of claims under the ADEA contained in this General
Release do not cover rights or claims that may arise after the date on which
Employee signs this General Release.


                                      62
<PAGE>

                                                                   EXHIBIT 10.19
                                                                   -------------

     This General Release provides for consideration in addition to anything of
value to which Employee is already entitled.

     Employee is advised to consult an attorney before signing this General
Release.

     Employee is granted twenty-one (21) days after Employee is presented with
this General Release to decide whether or not to sign this General Release.  If
Employee executes this General Release prior to the expiration of such period,
Employee does so voluntarily and after having had the opportunity to consult
with an attorney.

     Employee will have the right to revoke this General Release under the ADEA
within seven (7) days of signing this Release.  In the event this Release is
revoked, the General Release and the Separation Agreement executed concurrently
herewith will be null and void in their entirety.

     Manner of Revocation.  In the event that Employee elects to revoke this
     --------------------
Mutual General Release, he shall deliver within the time period prescribed above
to the Chairperson of the Compensation Committee of the Company's Board of
Directors, a writing stating that he is revoking this Mutual General Release and
subscribed by the Employee.

     Consequences of Revocation.  In the event that Employee should elect to
     ---------------------------
revoke this Mutual General Release as described in the paragraph above, this
Agreement shall be null and void in its entirety.

     No Assignment of Claims.  Employee represents and warrants to the Releases
     ------------------------
that there has been no assignment or other transfer of any interest in any Claim
which Employee may have against the Releases, or any of them, and Employee
agrees to indemnify and hold the Releases harmless from any liability, claims,
demands, damages, costs, expenses and attorneys' fees incurred as a result of
any person asserting any such assignment or transfer of any rights or Claims
under any such assignment or transfer from such Party.

     No Suits or Actions.  Employee agrees that if he hereafter commences, joins
     --------------------
in, or in any manner seeks relief through any suit arising out of, based upon,
or relating to any of the Claims released hereunder or in any manner asserts
against the Releases any of the Claims released hereunder, then he will pay to
the Releases against whom such claim(s) is asserted, in addition to any other
damages caused thereby, all attorneys' fees incurred by such Releases in
defending or otherwise responding to said suit or Claim.

     No Admission.  The Parties further understand and agree that neither the
     -------------
payment of money nor the execution of this Release shall constitute or be
construed as an admission of any liability whatsoever by the Releases.

Confidential Information and Trade secrets/Non-solicitation
-----------------------------------------------------------

     Non-competition.  Employee acknowledges that he has had access to and
     ----------------
actual knowledge of confidential trade secret information, which was entrusted
to him in his fiduciary capacity as an employee, officer and director of the
Company, and that he has a duty not to disclose or use, for his or any other
person's benefit, such information.  Employee agrees that such information
includes, without limitation, the identity of the Company's actual and targeted
customers, suppliers, business partners, and contacts; the business plans and
finances of the Company; technical processes and information developed by the
Company; and business processes developed by the Company.

Non-solicitation.
-----------------

     No Solicitation of Customers.  To ensure that no trade secret information
     ----------------------------
is misused, for a period of one (1) year from the date of execution of this
Agreement, Employee shall not directly or indirectly, either individually or
acting in concert, call upon or solicit any significant customer of the Company
or its subsidiaries with whom the Company or its subsidiaries has or have had
any dealings during the five-year period prior to the date hereof or may have
any dealings at any time during such period for the purpose of soliciting
business to sell

                                      63
<PAGE>

                                                                   EXHIBIT 10.19
                                                                   -------------

or otherwise provide to such customer or any other customer of the Company or
its subsidiaries any product or service included in the alternative long
distance carrier business, except for the benefit of or on behalf of the Company
and, in furtherance thereof, Employee, individually or acting in concert, shall
not attempt in any manner to solicit and/or otherwise persuade or induce any
such customer of the Company or its subsidiaries to cease to do business, reduce
the amount of business which any such customer has customarily done or
contemplated doing or refrain from increasing the amount of business with the
Company or its subsidiaries.

     No Solicitation of Distributor, Supplier and Employees.  To ensure that no
     ------------------------------------------------------
trade secret is misused, for a period of one (1) year from the date of execution
of this Agreement, Employee shall not directly or indirectly, either
individually or acting in concert, (i) request, induce or attempt to influence
any distributor or supplier of goods or services to the Company or its
subsidiaries to curtail, cancel or refrain from maintaining or increasing the
amount or type of business such distributor or supplier of goods or services is
then transacting with the Company or its subsidiaries; (ii) solicit for
employment or retention or hire, employ or retain any individual who is an
employee, agent or representative of the Company or its subsidiaries as of the
date hereof, except that he may solicit, hire or retain non-exclusive agents or
representatives of the Company provided that he does not use trade secret
information to do so, and such agent or representative would not be required to
curtail or cease performance of services for the Company; or (iii) influence or
attempt to influence any employee of the Company or its subsidiaries to
terminate his or her employment with the Company.

     In the event of a breach of Paragraph 6 by Employee, the Company shall be
entitled to injunctive relief, as well as to damages sustained and the recovery
of reasonable attorneys' fees. Employee represents that he has complied with the
terms of Paragraph 5 prior to the execution of this Agreement & Release.

Confidentiality of Terms; No Disparagement.
-------------------------------------------

     Employee expressly acknowledges that this Agreement and all matters
relating to or leading up to the negotiation and effectuation of this Agreement,
are confidential and shall be accorded the utmost confidentiality and shall not
be disclosed to any third party except to Employee's wife, his legal, actuarial,
pension, accounting and tax advisors to the extent necessary to perform services
or as required by law, rule or regulation.  In addition, Employee may disclose
the provisions of paragraph 6 to any prospective employer.  Employee agrees that
if any disclosure is made as permitted under this paragraph, then such persons
or entities shall be cautioned about the confidentiality obligations imposed by
this Agreement and required to abide by the terms of this confidential
undertaking.

     Employee agrees that he will conduct himself in a professional manner and
not make any disparaging, negative or other statements regarding the Company,
its affiliates or any of the Company's or its affiliates' officers, directors or
employees which could reasonably be believed in any way to have an adverse
effect on the business or affairs of the Company or its affiliates or otherwise
be injurious to or not be in the best interests of the Company, its affiliates
or any such other persons.  The Company agrees that will not make any
disparaging, negative or other unfavorable statements regarding the Employee.
The Company does not provide references.  If the Human Resources Department of
the Company is contacted concerning Employee's employment, it will follow its
usual practice and confirm dates of employment, salary and position held if
requested to do so.

     Advice of Counsel.  Employee represents and warrants that he has read this
     ------------------
Agreement, that he has had adequate time to consider it, that he had been
advised by the Company to consult with an attorney and has consulted with an
attorney prior to executing this Agreement, that he understands the meaning and
application of this Agreement and that he has signed this Agreement knowingly,
voluntarily and of his own free will with the intent of being bound by it.

     Severability; Modification of Agreement.  If any provision of this
     ---------------------------------------
Agreement shall be found invalid or unenforceable in whole or in part, then such
provisions shall be deemed to be modified or restricted to the extent and in the
manner necessary to render the same valid and enforceable or shall be deemed
excised from this Agreement as such circumstances may require, and this
Agreement shall be construed and enforced to the maximum extent permitted by law
as if such provision had been originally incorporated herein as so modified or
restricted or as if such provision had not been originally incorporated herein,
as the case may be.

                                      64
<PAGE>

                                                                   EXHIBIT 10.19
                                                                   -------------

     Arbitration.  Except for claims for emergency equitable or injunctive
     -----------
relief which cannot be timely addressed through arbitration, the parties hereby
agree to submit any claim or dispute arising out of the terms of this Agreement
(including exhibits) and/or any dispute arising out of or relating to Employee's
employment with the Company in any way, to private and confidential arbitration
by a single neutral arbitrator through JAMS/Endispute.  Subject to the terms of
this paragraph, the arbitration proceedings shall be governed by the then
current JAMS/Endispute rules governing employment disputes, and shall take place
in Los Angeles, California.  The decision of the arbitrator shall be final and
binding on all parties to this Agreement, and judgment thereon may be entered in
any court having jurisdiction.  The Parties shall share equally the arbitrator's
fee and all costs of services provided by the arbitrator and arbitration
organization; however, all costs of the arbitration proceeding or litigation to
enforce this Agreement, including attorneys' fees and witness expenses, shall be
paid as the arbitrator or court awards in accordance with applicable law.
Except for claims for emergency equitable or injunctive relief which cannot be
timely addressed through arbitration, this arbitration procedure is intended to
be the exclusive method of resolving any claim relating to the obligations set
forth in this Agreement.

     Successors and Assigns.  This Agreement shall be binding upon and inure to
     ----------------------
the benefit of and be enforceable by the parties hereto and their respective
successors and assigns.  Notwithstanding the foregoing, neither this Agreement
nor any rights hereunder may be assigned to any party by the Company or Employee
without the prior written consent of the other party hereto.

     Miscellaneous.  Employee agrees not to aid in, assist in, or encourage the
     --------------
pursuit of, litigation against the Company by any other person or entity.

     Entire Agreement.  Employee and the Company each represent and warrant that
     ----------------
no promise or inducement has been offered or made except as set forth herein and
that the consideration stated herein is the sole consideration for this
Agreement, provided, however, that (1) any agreements relating to the
confidentiality of trade-secret information and inventions and assignment of
trade-secret information and inventions are not superseded by this Agreement,
(2) the Option Agreements are not superseded or discharged by this Agreement;
and (3) the Notes are not superseded or discharged by this Agreement, except to
the extent the Notes are expressly modified by this Agreement.  The parties
agree that this Agreement shall be construed and enforced in accordance with the
laws of the State of California.

Stephen K. Workman                 Ortel Corporation




/S/   Stephen K. Workman           By: /S/   Wim H. J. Selders
------------------------------     ------------------------------------------
Date:  March 2, 1999               Title:  President, Chief Executive Officer
------------------------------     Date:   March 2, 1999

                                      65