Most managers dread the thought of terminating an employee.
But if the company decides that a company and an employee must go separate ways, then a Separation Agreement may be advisable. The typical scenario for a Separation Agreement involves an involuntary termination where the company is willing to pay some form of severance to the employee. In these cases, a Separation Agreement is recommended but not required. U.S. law only requires pay through the last day of work, as well as pay for any accrued vacation. However, further commitments by the company to provide severance pay may be found in a company severance policy or in an individual employee's employment contract.