SEVERANCE AND MUTUAL RELEASE AGREEMENT
(Michigan – Single–Employee Termination)
[// GUIDANCE: This template is drafted to comply with Michigan law, the federal Age Discrimination in Employment Act (29 U.S.C. § 621 et seq.) as amended by the Older Workers Benefit Protection Act (“OWBPA”), and other federal employment statutes. Bracketed text identifies user-customizable terms or optional clauses. Delete all guidance comments before final execution.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Operative Provisions
- Representations & Warranties
- Covenants & Restrictions
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
This Severance and Mutual Release Agreement (this “Agreement”) is entered into by and between [COMPANY LEGAL NAME], a [STATE OF INCORPORATION] [corporation/LLC], with its principal place of business at [ADDRESS] (“Company”), and [EMPLOYEE NAME], residing at [ADDRESS] (“Employee”).
Effective Date: The date this Agreement becomes irrevocable pursuant to Section 3.4(c).
Recitals
A. Employee’s employment with Company is terminating effective [TERMINATION DATE] (the “Separation Date”).
B. Company desires to provide Employee with severance benefits in exchange for Employee’s promises herein, including a comprehensive release of claims.
C. Employee desires to accept such benefits and enter into this Agreement on the terms set forth below.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
2. DEFINITIONS
The following terms have the meanings assigned below (alphabetical order):
“ADEA” – the federal Age Discrimination in Employment Act of 1967, as amended.
“Agreement” – this Severance and Mutual Release Agreement, including all Exhibits and Schedules.
“Confidential Information” – any non-public information concerning Company’s business, customers, finances, trade secrets, or personnel that Employee acquired during employment.
“Effective Date” – defined in the Document Header.
“Employment Claims” – any and all claims arising out of or related to Employee’s employment or termination, including but not limited to those under Title VII, ADEA, ADA, FMLA, Michigan’s Elliott-Larsen Civil Rights Act (Mich. Comp. Laws § 37.2101 et seq.), Michigan Persons With Disabilities Civil Rights Act, the Michigan Wage and Fringe Benefits Act, and common law.
“Severance Benefits” – the consideration described in Section 3.2 below.
“Releasees” – Company, its parents, subsidiaries, affiliates, predecessors, successors, assigns, and each of their respective officers, directors, employees, and agents.
3. OPERATIVE PROVISIONS
3.1 Termination of Employment. Employment terminates on the Separation Date. Except as specifically provided herein, Employee’s participation in all Company benefit plans ends pursuant to plan terms.
3.2 Severance Benefits. Conditioned on (i) timely execution and non-revocation of this Agreement and (ii) continued compliance with its terms, Company shall provide Employee:
(a) Cash Severance. A lump-sum payment of $[AMOUNT] (the “Severance Payment”), less applicable withholdings, payable on the first regular payroll date after the Effective Date.
(b) COBRA Premium Assistance. Reimbursement of Employee’s COBRA premiums for [NUMBER] months following the Separation Date, subject to timely election and proof of payment.
(c) [OPTIONAL: Outplacement Services] valued at $[AMOUNT] for a period of [NUMBER] months.
[// GUIDANCE: Insert any equity treatment, bonus payments, or other benefits here.]
3.3 Adequacy of Consideration. Employee acknowledges that the Severance Benefits exceed anything otherwise due and constitute adequate consideration for Employee’s promises herein.
3.4 ADEA/OWBPA Compliance.
(a) Consideration Period. Employee has 21 days (or 45 days in a group termination; Company to modify) to consider this Agreement.
(b) Advice to Consult Counsel. Employee is advised, in writing, to consult an attorney before signing.
(c) Revocation Period. Employee may revoke this Agreement within 7 days after signing by delivering written notice to Company’s [TITLE] at [ADDRESS]. This Agreement becomes effective on the eighth day (the “Effective Date”) if not revoked.
(d) Knowing and Voluntary. Employee represents that execution is knowing and voluntary within the meaning of 29 U.S.C. § 626(f).
3.5 Taxes. Company will withhold legally required taxes. Employee is solely responsible for all other tax liabilities.
3.6 Conditions Precedent. Company’s obligations are void if Employee breaches Sections 5 or 7.2.
4. REPRESENTATIONS & WARRANTIES
4.1 By Employee. Employee represents and warrants that:
(a) No Pending Claims. Employee has not filed, and is not aware of, any claims against any Releasee except those expressly preserved herein.
(b) No Reliance. Employee enters into this Agreement without reliance on any representation not set forth herein.
(c) Authority. Employee has full capacity and authority to execute and perform this Agreement.
4.2 By Company. Company represents and warrants that it is duly authorized to enter into this Agreement and to perform its obligations.
4.3 Survival. The representations and warranties in this Section survive the Effective Date.
5. COVENANTS & RESTRICTIONS
5.1 Mutual Non-Disparagement. Neither party shall make any statement reasonably expected to harm the other’s reputation; factual statements made in response to legal process are excluded.
5.2 Confidentiality of Agreement. Employee shall keep the terms of this Agreement confidential, except (i) to immediate family, tax or legal advisors, or (ii) as legally required.
5.3 Return of Company Property. No later than the Separation Date, Employee shall return all Company Property, including electronic records.
5.4 [OPTIONAL] Restrictive Covenants.
(a) Non-Solicitation. For [12] months after Separation Date, Employee shall not solicit Company’s employees or customers.
(b) Confidentiality. Employee shall protect Confidential Information indefinitely.
5.5 Cooperation. Employee shall reasonably cooperate with Company in any investigation or litigation relating to matters occurring during employment.
6. DEFAULT & REMEDIES
6.1 Events of Default. A party’s material breach of this Agreement constitutes a default.
6.2 Notice and Cure. Non-breaching party must give written notice specifying the breach; breaching party has 10 days to cure (if curable).
6.3 Remedies.
(a) Monetary. Non-breaching party may recover actual damages, capped per Section 7.3.
(b) Equitable Relief. The parties acknowledge that breach of Sections 5.2–5.5 may cause irreparable harm. Subject to Section 8.4 (limited injunctive relief), either party may seek specific performance.
(c) Attorneys’ Fees. Prevailing party in any action to enforce this Agreement is entitled to reasonable attorneys’ fees and costs.
7. RISK ALLOCATION
7.1 Mutual Release of Claims.
(a) Released Claims by Employee. For valuable consideration, Employee, on behalf of self and heirs, irrevocably waives and releases all Employment Claims against Releasees, whether known or unknown, through the Effective Date, excluding:
(i) claims arising after the Effective Date;
(ii) rights to enforce this Agreement;
(iii) claims for vested retirement benefits or workers’ compensation;
(iv) rights of indemnification under applicable law.
(b) Released Claims by Company. Company releases Employee from any claims arising out of employment known to Company as of the Effective Date, excluding willful misconduct, fraud, or criminal acts.
7.2 Indemnification. Each party shall indemnify, defend, and hold harmless the other from third-party claims arising from its own breach of this Agreement or unlawful acts.
7.3 Limitation of Liability. Except for (i) breach of Section 5 (Covenants), (ii) indemnification obligations under Section 7.2, and (iii) intentional misconduct, each party’s aggregate liability under this Agreement shall not exceed the Severance Payment.
7.4 Force Majeure. Neither party is liable for failure to perform due to events beyond reasonable control, provided prompt written notice and reasonable mitigation.
8. DISPUTE RESOLUTION
8.1 Governing Law. This Agreement shall be governed by the laws of the State of Michigan and, where applicable, federal law.
8.2 Forum Selection. Any action arising out of or relating to this Agreement shall be brought exclusively in (i) the state courts of Michigan located in [COUNTY], or (ii) the United States District Court for the [EASTERN/WESTERN] District of Michigan, and each party consents to personal jurisdiction therein.
8.3 Optional Arbitration.
[ ] Check if selected. If selected, any dispute shall be resolved by binding arbitration administered by the American Arbitration Association under its Employment Arbitration Rules, held in [CITY, MI]. Judgment on the award may be entered in any court of competent jurisdiction.
8.4 Jury Waiver. To the extent not prohibited by law, each party knowingly and voluntarily waives the right to a trial by jury in any proceeding relating to this Agreement.
8.5 Injunctive Relief Limitation. Equitable relief shall be limited to preserving the status quo ante and enforcing Sections 5.2–5.5 pending final adjudication; no party may seek broad injunctions limiting future employment.
9. GENERAL PROVISIONS
9.1 Amendments; Waivers. No amendment or waiver is effective unless in a writing signed by both parties. A waiver on one occasion is not a waiver on any other occasion.
9.2 Assignment. Neither party may assign this Agreement without the prior written consent of the other, except Company may assign to a successor in interest.
9.3 Successors and Assigns. This Agreement binds and inures to the benefit of the parties’ permitted successors and assigns.
9.4 Severability; Reformation. If any provision is unenforceable, it shall be limited to the minimum extent necessary, and the remaining provisions shall remain in full force.
9.5 Entire Agreement; Integration. This Agreement constitutes the entire understanding between the parties and supersedes all prior agreements concerning the subject matter.
9.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each deemed an original, and signatures transmitted by PDF or electronic signature service (e.g., DocuSign) shall be deemed originals.
9.7 Notices. All notices must be in writing and delivered (i) personally, (ii) by certified mail (return receipt requested), or (iii) by nationally recognized overnight courier, to the addresses in the Document Header or as later designated. Notice is effective upon receipt.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the parties have executed this Agreement as of the dates set forth below.
| COMPANY | EMPLOYEE |
|---|---|
| [COMPANY LEGAL NAME] | [EMPLOYEE NAME] |
| By: _________ | ______ |
| Name: _______ | Date: _______ |
| Title: _______ | |
| Date: _______ |
[// GUIDANCE: Add notary acknowledgment below if Company practice or MI law for your entity type requires notarization.]
[// GUIDANCE: Provide Employee with (i) this Agreement, (ii) OWBPA disclosure information if a group termination, and (iii) any state-mandated unemployment or benefit notices. Retain executed copies for at least six years.]